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 (30%). 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 25.0% O a. $13,000 O b. $9,750 O c. $21,750 O d. $25,000 AGE
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 (30%). 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 25.0% O a. $13,000 O b. $9,750 O c. $21,750 O d. $25,000 AGE
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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 (30%). 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
25.0%
O a. $13,000
O b. $9,750
O c. $21,750
O d. $25,000
AGE
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