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What is the free cash flow in the final year-kinston limited

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Kinston Limited is considering investing in new equipment that will cost 126000 dollars and will last for three years. The equipment will be fully depreciated using the straight-line method. The equipment will generate revenues of 115000 dollars each year and the cost of goods sold will be 50% of sales. At the end of year three, the equipment will be sold for 15000 dollars. The appropriate cost of capital is 10% and Kinston's tax rate is 35%.

What is the free cash flow in the final year (i.e., free cash flows in year three)?

Reference no: EM132630999

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