Thornley Co. is considering a 3-year project with an initial cost of $636, 000. The equipment is classified as MACRS 7-year property. The MACRS table values are 0.1429, 0.2449, 0.1749, 0.1249, 0.0893, 0.0892, 0.0893, and 0.0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $279,000. The tax rate is 35 percent, and the required return is 17 percent. An extra $23, 000 of inventory will be required for the life of the project. Annual sales are estimated at $379,000 with costs of $247,000. What is the total cash flow for Year 3?
Thornley Co. is considering a 3-year project with an initial cost of $636, 000. The equipment is classified as MACRS 7-year property. The MACRS table values are 0.1429, 0.2449, 0.1749, 0.1249, 0.0893, 0.0892, 0.0893, and 0.0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $279,000. The tax rate is 35 percent, and the required return is 17 percent. An extra $23, 000 of inventory will be required for the life of the project. Annual sales are estimated at $379,000 with costs of $247,000. What is the total cash flow for Year 3?
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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Thornley Co. is considering a 3-year project with an initial cost of $636, 000. The equipment is classified
as MACRS 7-year property. The MACRS table values are
0.1429, 0.2449, 0.1749, 0.1249, 0.0893, 0.0892, 0.0893, and 0.0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $279,000. The tax rate is 35 percent, and the required return is 17 percent. An extra $23, 000 of inventory will be required for the life of the project.
Annual sales are estimated at $379,000 with costs of $247,000. What is the total cash flow for Year 3?
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