What is the cash flow of the project in year 5

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ABC, Inc. purchased an equipment at time=0 for $73,727. The shipping and installation costs were $16,855. The equipment is classified as a 5-year MACRS property. The investment in net working capital at time=0 was $11,021 which would be recouped at the end of the project. The project life is five years. At the end of the fifth year, the company will sell the equipment for $26,277. The annual cash flows are $36,070. What is the cash flow of the project in Year 5? That is, solve for CF5. Assume that the tax rate is 14%

The MACRS allowance percentages are as follows, starting with Year 1: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.

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

Reference no: EM132441063

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