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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. depr’n $25,000

Tax rate 35%

(Points: 4)

  • Finance -

    the answer is $31,500

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