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What the annual cash flow excluding the capital outlay

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Question - Management of Red Hot Choice Ltd is considering the following investment project:

Capital Outlay $100,000

Net Profit p.a. (before Depreciation and Tax) $50,000

Depreciation p.a. $20,000

Economic Life 5 years

Salvage Value $nil

Tax Rate payable (paid in year of income) 30%

Required Rate of Return 6%

Required - What the annual cash flow (excluding the capital outlay) for each year?

a. $21,000

b. $41,000

c. $35,000

d. $45,000

Reference no: EM133034582

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