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August 29, 2014

Homework Help: Finance

Posted by Lorraine on Wednesday, July 28, 2010 at 7:56pm.

Delta Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, after which it will be worthless, and it 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 operating cash flow during Year 1? Equipment cost (depreciable basis) $75,000, Straight line depreciation rate 33.33%, Sales $60,000, Operating costs excl. deprín $25,000, Tax rate 35%. 1. $27,000, 2. $28,500, 3. $30,000, 4. $31,000, 5. $33,000

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