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Find what is the year one cash flow

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Reference no: EM132750373

Problem 1: You were just hired by Bear Down Inc. to analyze the purchase of reusable water bottle manufacturing equipment. The equipment has a 3-year tax life, and the allowed depreciation rates for such property are 33.33%, 44.45%, 14.81%, and 7.41% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the equipment's 10-year expected life. What is the Year 1 cash flow?

Equipment cost (depreciable basis): $57,750
Sales revenues, each year: $60,000
Operating Costs (excluding depreciation): $25,000
Tax Rate: 40%

 

Reference no: EM132750373

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