Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life,...
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. Under the new tax law, the equipment is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. Revenues and 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 Sales revenues, each year $60,000 Operating costs $25,000 Tax rate 25.0% a. $26,250 b. $28,222 c. $29,598 d. $33,040 e. $32,008
Homework Answers
rate positively ..
| Computation of year 1 cash flow | ||||
| Revenue= | 60,000.00 | |||
| Cost= | 25,000.00 | |||
| Profit before tax | 35,000.00 | |||
| Tax @ 25% | 8,750.00 | |||
| Profit after tax | 26,250.00 | |||
| Cash flow= | 26,250.00 | |||
| ans = | 26,250.00 | |||
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Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life,...
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