1-5 Calculate financial net income AFIT and net cash flow AFIT for year 3 only. Your Time 0 investment for a pumping unit is $50,000. An- nual gross revenues are $40,000. Direct costs are $5,000 per year. Depreciation for financial net in- come is calculated assuming a 5 year life, no salvage value, and the straight line method. Cash income taxes are 40% of gross revenue. Assume
1-5 Calculate financial net income AFIT and net cash flow AFIT for year 3 only. Your Time 0 investment for a pumping unit is $50,000. An- nual gross revenues are $40,000. Direct costs are $5,000 per year. Depreciation for financial net in- come is calculated assuming a 5 year life, no salvage value, and the straight line method. Cash income taxes are 40% of gross revenue. Assume
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:1-5 Calculate financial net income AFIT and
net cash flow AFIT for year 3 only. Your Time
0 investment for a pumping unit is $50,000. An-
nual gross revenues are $40,000. Direct costs are
$5,000 per year. Depreciation for financial net in-
come is calculated assuming a 5 year life, no
salvage value, and the straight line method. Cash
income taxes are 40% of gross revenue. Assume
cash taxes for your financial net income model.
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