What is the operating cash flow in each of the three periods

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You are considering investing in a project that is a cost cutting proposal. additional net revenues from the project are expected to equal $83.33 for each of the three years of the project life. The process has an initial cost of $125 and will be depreciated straight line over 3 years to a salvage value of zero. Assume a 34% tax bracket and a discount rate of 15%.

What is the value of just the tax shield in each period from the investment in the process?

What is the operating cash flow in each of the three periods?

Suppose the equipment is sold at the end of year 3 for $20, pre tax. What is the NPV?

Suppose the equipment is sold at the end of year 3 for $20, pre tax. What is the IRR?

Reference no: EM13767618

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