Calculate the initial outlay and net cash flows for years

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The president of Speedy Copy has asked you to evaluate the proposed acquisition of a new copier. The copier equipment is expected to cost $30,000 and will be depreciated in a straight-line manner for the three years of the asset’s life after which it will be worthless. Use of the equipment will require an increase in net working capital (additional paper sizes which can be accommodated by the new copier) of $4,000. Increased sales from the faculty looking for a working copier are expected to be $20,000 per year with operating costs (excluding depreciation) of $5,000 per year. Calculate the initial outlay and net cash flows for years 1-3. In other words, show the net cash flows for t=0, t=1, t=2, and t=3. Speedy Copy’s marginal tax rate is 40 percent.

Reference no: EM131346444

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