Laurel’s Lawn Care Ltd., has a new mower line that can generate revenues of $171,000 per year. Direct production costs are $57,000, and the fixed costs of maintaining the lawn mower factory are $23,500 a year. The factory originally cost $1.14 million and is being depreciated for tax purposes over 20 years using straight-line depreciation. Calculate the operating cash flows of the project if the firm’s tax bracket is 25%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
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Laurel’s Lawn Care Ltd., has a new mower line that can generate revenues of $171,000 per year. Direct production costs are $57,000, and the fixed costs of maintaining the lawn mower factory are $23,500 a year. The factory originally cost $1.14 million and is being depreciated for tax purposes over 20 years using straight-line depreciation. Calculate the operating cash flows of the project if the firm’s tax bracket is 25%

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