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Clemson Software is considering a new project whose data are shown below. The required equipment has...

Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number. Equipment cost (depreciable basis) $100,000 Straight-line depreciation rate 33.333% Sales revenues, each year $60,000 Operating costs (excl. depr.) $25,000 Tax rate 35.0% a. $29,943 b. $32,008 c. $34,417 d. $42,333 e. $37,858

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Expert Solution

Solution:

The Project's Year 1 Cash Flow = $ 34,417

Thus the solution is Option c. $ 34,417

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 7 months ago
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