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Munir S/B has provided the following data concerning a proposed investment project:               Initial investment.................. $861,000   Annual net cash receipts...... $271,000   Life of the project................. 5 years   Salvage value...................... $129,000   The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (ii)Calculate the taxable cash flows for years 1-3

Munir S/B has provided the following data concerning a proposed investment project:               Initial investment.................. $861,000   Annual net cash receipts...... $271,000   Life of the project................. 5 years   Salvage value...................... $129,000   The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%. Required: (ii)Calculate the taxable cash flows for years 1-3

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 13

Munir S/B has provided the following data concerning a proposed investment project:

           

 

Initial investment..................

$861,000

 

Annual net cash receipts......

$271,000

 

Life of the project.................

5 years

 

Salvage value......................

$129,000

 

The company's tax rate is 30%. For tax purposes, the straight line method will be used and capital allowances (CA)s will be claimed only over 3 years over the entire initial cost without any reduction for salvage value. The company uses a discount rate of 11%.

Required:

(ii)Calculate the taxable cash flows for years 1-3

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