What is the operating cash flow per year

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Reference no: EM131551434

1. XYZ, Inc. is considering a new project requiring a $180,000 initial investment in equipment having a useful life of 3 years with zero expected salvage value. The investment will produce $130,000 in annual revenues and $90,000 in annual costs. Assume a tax rate of 30% and straight-line depreciation. What is the operating cash flow per year?

$46,000

$66,000

$70,000

$58,000

$88,000

2. Your company plans to spend $2,150,000 cash to build a plant that will produce benefits with a total present value of $4,050,000. Your company already owns the land on which it will build the plant. That land was purchased with cash several years ago for $700,000, which is the current book value of the land. The land could be sold for $1,775,000 after-tax today. What is the net present value of the proposed plant?

($575,000)

($125,000)

$125,000

$1,900,000

Reference no: EM131551434

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