Lendrum Inc. is considering a new project whose data are shown below. The equipment has an econo and is in CCA class 10 (20%). The half-year rule applies. Revenues and cash operating costs are expecte over the project's 3-year life. What is the net operating cash flow for Year 1? Equipment cost $80,000 Annual sales revenues $60,000 Annual cash operating costs $35,000 Tax rate 35.0% a)25,275 b)17,000 c)19,050 d)30,359

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Lendrum Inc. is considering a new project whose data are shown below. The equipment has an economic life of 3 years,
and is in CCA class 10 (20%). The half-year rule applies. Revenues and cash operating costs are expected to be constant
over the project's 3-year life. What is the net operating cash flow for Year 1?
Equipment cost
$80,000
Annual sales revenues
$60,000
Annual cash operating costs $35,000
Tax rate
35.0%
a)25,275
b)17,000
c)19,050
d)30,359
Transcribed Image Text:Lendrum Inc. is considering a new project whose data are shown below. The equipment has an economic life of 3 years, and is in CCA class 10 (20%). The half-year rule applies. Revenues and cash operating costs are expected to be constant over the project's 3-year life. What is the net operating cash flow for Year 1? Equipment cost $80,000 Annual sales revenues $60,000 Annual cash operating costs $35,000 Tax rate 35.0% a)25,275 b)17,000 c)19,050 d)30,359
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