Solution-What is the cash flow of the project

What is the cash flow of the project

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ABC, Inc. purchased an equipment at time=0 for $90,414. The shipping and installation costs were $15,579. The equipment is classified as a 7-year MACRS property. The investment in net working capital at time=0 was $15,085 which would be recouped at the end of the project. The project life is six years. At the end of the sixth year, the company will sell the equipment for $14,421. The annual cash flows are $99,944. What is the cash flow of the project in Year 6? That is solve for CF₆. Assume that the tax rate is 15%.

The MACRS allowance percentages are as follows, starting with Year 1: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.

Note: In the last year of the project, the Total Cash Flow = Operating Cash Flow + Terminal Cash Flow

Reference no: EM132439161

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What is the cash flow of the project

Reference no: EM132439161

Reference no: EM132439161

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