You are considering a three-year project. The project requires buying a piece of new equipment costing $300,000, which will be depreciated straight-line to zero over 3 years. At the end of the third year of operation, the equipment will be sold for $100,000. The new project will generate $500,000 in additional annual sales and will require $200,000 in additional annual cost excluding depreciation for the next three years. The project also requires an immediate investment in net working capital of $100,000, which will be fully recovered at the end of three years. The average tax rate for the company is 40%. What is the project cash flow (cash flow from assets) for year 3?
You are considering a three-year project. The project requires buying a piece of new equipment costing $300,000, which will be
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