Equipment cost and operating costs

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Reference no: EM13911524

Fool Proof Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 1 cash flow?

Equipment cost (depreciable basis) $59,000

Sales revenues, each year $60,000

Operating costs (excl. deprec.) $25,000

Tax rate 35.0%

a. $26,312

b. $34,590

c. $29,565

d. $28,973

e. $33,112

Reference no: EM13911524

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