Determine the expected annual net cash inflow

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To open a new store, Linton Tire Company plans to invest $364,000 in equipment expected to have a seven -year useful life and no salvage value. Linton expects the new store to generate annual cash revenues of $325,000 and to incur annual cash operating expenses of $189,000. Linton’s average income tax rate is 40 percent. The company uses straight-line depreciation.

Required

Determine the expected annual net cash inflow / outflow from operations for each of the first four years after Linton opens the new store. (Negative amounts should be indicated by a minus sign.)

Reference no: EM13768850

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