To open a new store, Zachary Tire Company plans to invest $378,000 in equipment expected to have a seven-year useful life and no salvage value. Zachary expects the new store to generate annual cash revenues of $322,000 and to incur annual cash operating expenses of $192,000. Zachary's average income tax rate is 40 percent. The company uses straight-line depreciation. Required Determine the expected annual net cash inflow from operations for each of the first four years after Zachary opens the new store. Note: Negative amounts should be indicated by a minus sign. Year 1 Year 2 Year 3 Year 4 Net cash Inflow or Outflow

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
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**Text for Educational Website:**

To open a new store, Zachary Tire Company plans to invest $378,000 in equipment expected to have a seven-year useful life and no salvage value. Zachary expects the new store to generate annual cash revenues of $322,000 and to incur annual cash operating expenses of $192,000. Zachary’s average income tax rate is 40 percent. The company uses straight-line depreciation.

**Required:**

Determine the expected annual net cash inflow from operations for each of the first four years after Zachary opens the new store.

*Note: Negative amounts should be indicated by a minus sign.*

**Table:**

| Year | Net cash | Inflow or Outflow |
|------|----------|-------------------|
| Year 1 |          |                   |
| Year 2 |          |                   |
| Year 3 |          |                   |
| Year 4 |          |                   |
Transcribed Image Text:**Text for Educational Website:** To open a new store, Zachary Tire Company plans to invest $378,000 in equipment expected to have a seven-year useful life and no salvage value. Zachary expects the new store to generate annual cash revenues of $322,000 and to incur annual cash operating expenses of $192,000. Zachary’s average income tax rate is 40 percent. The company uses straight-line depreciation. **Required:** Determine the expected annual net cash inflow from operations for each of the first four years after Zachary opens the new store. *Note: Negative amounts should be indicated by a minus sign.* **Table:** | Year | Net cash | Inflow or Outflow | |------|----------|-------------------| | Year 1 | | | | Year 2 | | | | Year 3 | | | | Year 4 | | |
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