Garfield, Inc., is considering a ten-year investment project with forecasted cash revenues of P400,000 per year and forecasted cash expenses of P290,000 per year. The initial cost of the equipment for the project is P230,000. The salvage value of the equipment is P90,000 at the end of the ten years of the project. The net book value of the equipment for tax purposes will be zero at the end of the ten years. The project requires a working capital investment of P70,000 at its inception and another working capital infusion of P50,000 at the end of year five. All of this working capital would be released for use elsewhere at the end of the project. The company's tax rate is 40%. What is the after-tax net cash flow in the tenth year of the project
Garfield, Inc., is considering a ten-year investment project with
cash revenues of P400,000 per year and forecasted cash expenses of P290,000 per
year. The initial cost of the equipment for the project is P230,000. The salvage value of
the equipment is P90,000 at the end of the ten years of the project. The net book value
of the equipment for tax purposes will be zero at the end of the ten years. The project
requires a
capital infusion of P50,000 at the end of year five. All of this working capital would be
released for use elsewhere at the end of the project. The company's tax rate is 40%.
What is the after-tax net
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