Question

Large Manufacturing, Inc. is considering investing in some new equipment whose data are shown below. The equipment has a 3-year class life and will be depreciated by the MACRS depreciation system, and it will have a positive pre-tax salvage value at the end of Year 3, when the project will be closed down. Also, some new working capital will be required, but it will be recovered at the end of the project's life. Revenues and cash operating costs are expected to be constant over the project's 3-year life.  what is the Year 1 Net Operating Cash Flow?
	WACC					11.0%
	Net investment in fixed assets (depreciable basis)					$70,000
	Required new working capital					$10,000
	Sales revenues, each year					$95,000
	Cash operating costs excl. depr'n, each year					$30,000
	Expected pretax salvage value					$9,000
	Tax rate					30.0%

what is the Year 1 Net Operating Cash Flow?

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Answer 1

Solution:-

To Calculate Year 1 Net operating cash flows-

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