Determine the expected annual net cash flows

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Question - To open a new store, Walton Tire Company plans to invest $295,000 in equipment expected to have a five -year useful life and no salvage value. Walton expects the new store to generate annual cash revenues of $320,000 and to incur annual cash operating expenses of $187,000. Walton's average income tax rate is 30 percent. The company uses straight-line depreciation.

Required - Determine the expected annual net cash flows from operations for each of the first four years after Walton opens the new store.

Reference no: EM132896539

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