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What is the net after-tax income per year

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Reference no: EM131879900

Problem - Capital Budgeting

Slowly Company has obtained the following information about a prepared project.

Future cash sales

$200,000

Future cash expenses

$140,000

Depreciation expense per year

$35,000

Estimated salvage value in 5 years

5,000

Cost of equipment

$180,000

Cost of capital

10%

Income tax rate

40%

Estimated useful life (in years)

5

Depreciation method

Straight-line

Present value of ordinary annuity at 10% for 5 periods

3.7908

Present value of a dollar at 10% for 5 periods

0.6209

Required:

A) What is the net after-tax income per year?

B) What is the annual after-tax cash flow from depreciation expense?

C) What is the NPV of the project?

Reference no: EM131879900

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