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August 29, 2015

Homework Help: Corporate Finance

Posted by Andy on Monday, March 1, 2010 at 1:20pm.

19. Fool Proof Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the MACRS rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year life. What is the operating cash flow for Year 1?

Equipment cost (depreciable basis) $65,000
Sales revenues, each year $60,000
Operating costs excl. depr'n $25,000
Tax rate 35.0%

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