finance

posted by .

I'm having a terrible time understanding how to estimate cash flow. My book only provides one example, and it's long and drawn out.

The question I'm working on is this:

A project that is expected to last six years will generate a profit and cash flow contribution before taxes and depreciation of \$23,000 per year. It requires the initial purchase of equipment costing \$60,000, which will be depreciated over four years. The relevant tax rate is 25%. Calculate the project's cash flows.

I don't even know where to start. Do I assume the depreciation is straight-line, or does that even matter? Do I take out the 60grand from the first year's cash flow? Where/when do I figure in the tax rate--the example in the book doesn't even mention this. Please help! This problem just feels like there isn't enough information, but I'm sure there is, and I'm just not getting it.

Similar Questions

1. Cash Flow

A project lasted several months and at the end of the project life, a piece of specialized equipment having a book value of \$4,000 is expected to bring \$3,000 upon resale, and the income tax rate is 40%, how much will be the cash flow?

You have been assigned the task of using the corparate ,or free cash flow , model to estimate Petry's Corporation intrinsic value. the firm WACC is 10.00% , its end of year cash flow ( FCF)IS EXPECTED TO BE 90.0 MILLION, THE FCFs are …
3. Finance ( NEED HELP BAD)

Masulis Inc is considering a project that has the following cash flow and WACC Data .what is the project discounted payback WACC 10% years 0 1 2 3 4 CASH FLOW -700 525 485 445 405
4. FINANCE

Tim recently invested \$3,500 in a project that is promising to return 10.75 percent per year. The cash flows are expected to be as follows: End of Cash Year Flow 1 \$750 2 800 3 ?
5. finance

John Keene recently invested \$3,500 in a project that is promising to return 10.75 percent per year. The cash flows are expected to be as follows: End of Cash Year Flow 1 \$750 2 800 3 ?
6. Finance

Thompson Stores is considering a project that has the following cash flow data. What is the project's IRR?
7. Finance

If depreciation is not a cash flow item, why does it affect the level of cash flows from a project in any way?
8. finance

A project has an initial requirement of \$261,000 for fixed assets and \$27,000 for net working capital. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value …
9. Finance

What is the value of a building that is expected to generate fixed annual cash flows of 124,250 dollars every year for a certain amount of time if the first annual cash flow is expected in 3 years from today and the last annual cash …
10. finance

Emma's Cabinets is looking at a project that will require \$80,000 in fixed assets and another \$20,000 in net working capital. The project is expected to produce annual sales of \$110,000 with associated costs (other than depreciation) …

More Similar Questions