A high-pressure reactor vessel in a pharmaceutical company was purchased for $200,000. It has a useful life of 10 years, and the vessel can be sold for $30,000 at that time. The vessel will be depreciated with the MACRS method (its class life is five years). Annual net cash flow (revenue less expenses) is $200,000 per year over the useful life. The effective income tax rate is 40%. What is the after-tax cash flow of the vessel at the end of year 10?
A high-pressure reactor vessel in a pharmaceutical company was purchased for $200,000. It has a useful life of 10 years, and the vessel can be sold for $30,000 at that time. The vessel will be depreciated with the MACRS method (its class life is five years). Annual net cash flow (revenue less expenses) is $200,000 per year over the useful life. The effective income tax rate is 40%. What is the after-tax cash flow of the vessel at the end of year 10?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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A high-pressure reactor vessel in a pharmaceutical company was purchased for $200,000. It has a useful life of 10 years, and the vessel can be sold for $30,000 at that time. The vessel will be
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