A firm is considering a new project that will generate cash revenue of $1,300,000 and cash expens...

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A firm is considering a new project that will generate cash revenue of $1,300,000 and cash expenses of $750,000 per year for

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Answer 1

Answer #1

Calculate the year 2 cash flows as follows:

3 Hl 172 Particulars Year Year1 r2 Year 3 Year4 Year 5 173 Initial investment$250,000 174 Cash revenue 175 Expenses 176 Depre

Therefore, the year 2 cash flows is $379,375.

Therefore, Option D is correct.

Formulas:

Year 4 172 Particulars 173 Initial investment -250000 174Cash revenue 175 Expenses 176 Depreciation 177 EBIT 178 Tax@ 35% 179

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Answer 2

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