What are the net operating cash flows after tax

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Reference no: EM131307805

(Basic capital budgeting) An investment of $30,000 will be depreciated straight line for 10 years down to zero salvage value. For its 10-years life, the investment will generate annual sales of $12,000 and annual cash operating expenses of $2,000. Although the investment is depreciated to zero book value, it should sell for $3,000 in 10years. The marginal income tax rate is 40% and the cost of capital is 10%.

a) What are the net operating cash flows after tax?

b) What is the NPV of the investment?

Reference no: EM131307805

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