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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 and 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?

Equipment cost (depreciable basis) $65,000

Increase in inventory $5,000

Straight-line depreciation rate 33.333% ($21,667 per year)

Sales revenues, each year $60,000

Operating costs (excl. depreciation) $25,000

Salvage Value $10,000

Tax rate 35.0%

a. $28,115 b. $28,836 c. $29,575 d. $30,333 e. $31,092

Based on the information in the previous question, what is the project’s non-operating cash flows? a. $6,500 b. $10,000 c. $11,500 d. $15,000 e. $16,000

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 11 months ago
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