The Galactic Empire is considering building a new Death Star. The Empire estimates the building costs to be $1,000,000. Shipping and installation costs of $75,000 for the Death Star will be capitalized and depreciated using bonus depreciation. The Death Star has an expected life of five years (as long as Luke Skywalker doesn't blow it up), a $100,000 estimated residual value, and falls under the MACRS five-year class life. Revenue from the new Death Star is expected to be $650,000 per year and costs are expected to be $250,000 per year. The Empire has a tax rate of 25%, and expects net working capital to decrease by $100,000 at the beginning of the Death Star use. Develop a schedule of free cash flows for the project.
The Galactic Empire is considering building a new Death Star. The Empire estimates the building costs to be $1,000,000. Shipping and installation costs of $75,000 for the Death Star will be capitalized and
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