Answer to Question 1:
Initial Investment = $16,400
Residual Value = $2,800
Useful Life = 4 years
Annual Depreciation = (Initial Investment - Residual Value) /
Useful Life
Annual Depreciation = ($16,400 - $2,800) / 4
Annual Depreciation = $3,400
Initial Investment in NWC = $5,600
Salvage Value = $4,500
After-tax Salvage Value = Salvage Value - (Salvage Value - Book
Value) * Tax Rate
After-tax Salvage Value = $4,500 - ($4,500 - $2,800) * 0.35
After-tax Salvage Value = $4,500 - $595
After-tax Salvage Value = $3,905
Annual Operating Cash Flow = $33,000
Year 4:
Net Cash Flows = Operating Cash Flow + NWC recovered + After-tax
Salvage Value
Net Cash Flows = $33,000 + $5,600 + $3,905
Net Cash Flows = $42,505
can someone please explain with formulas and all work shown? i rate! :) A project has...
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