Water's Edge Resorts is evaluating a project that would require an initial investment in equipment of $498,000.00 and that is expected to last for 4 years. MACRS depreciation would be used where the depreciation rates in years 1, 2, 3, 4, and 5 are 25%, 45%, 15%, 10, and 5%, respectively. For each year of the project, Water's Edge Resorts expects relevant annual revenue associated with the project to be $644000.00 and relevant annual costs associated with the project to be $479000.00. The tax rate is 44.00 percent. What is (X plus Y) if X is the relevant operating cash flow (OCF) associated with the project expected in year 1 of the project and Y is the relevant OCF associated with the project expected in year 4 of the project?

Water's Edge Resorts is evaluating a project that would require an initial investment in equipment of $498,000.00 and that is expected to last for 4 years. MACRS depreciation would be used where the depreciation rates in years 1, 2, 3, 4, and 5 are 25%, 45%, 15%, 10, and 5%, respectively. For each year of the project, Water's Edge Resorts expects relevant annual revenue associated with the project to be $644000.00 and relevant annual costs associated with the project to be $479000.00. The tax rate is 44.00 percent. What is (X plus Y) if X is the relevant operating cash flow (OCF) associated with the project expected in year 1 of the project and Y is the relevant OCF associated with the project expected in year 4 of the project?

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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