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What is the net operating cash flow in year 1

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You have been asked to evaluate a proposed investment in new equipment. The equipment's price is $38836, and will be depreciated straight-line over a three year life. Purchase of the new equipment would require an increase in net operating working capital of $5,000. The new acquisition would increase the firm's before-tax revenues by $22,000 per year but would also increase operating costs by $6,000 per year. The new equipment is expected to be used for 3 years and then be sold. The firm's marginal tax rate is 30%. What is the net operating cash flow in Year 1?

Reference no: EM132689314

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