What is the project year cash flow

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Point 1: Fitzgerald Computers is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life.

Question 1: What is the project's Year 1 cash flow?

Equipment cost (depreciable basis)         $65,000

Straight-line depreciation rate             33.333%

Sales revenues, each year                  $60,000

Operating costs (excl. deprec.)            $25,000

Tax rate                                             25.0%

Option a. $30,103

Option b. $29,351

Option c. $32,458

Option d. $30,875

Option e. $31,667

Reference no: EM132479572

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