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Company is estimating proposed 4-year project. Depreciable cost will comprise the following: $300,000 for equipment, $20,000 for shipping, and $30,000 for installation. Depreciation life is under MACRS 3-year class, with salvage value of $45,000. Inventories will increase by $18,000 and accounts payable will increase by $3,000. In addition, new sales are evaluated to be 150,000 units per year at $2.25 per unit. There is variable operating cost that is 60% of sales and company's marginal tax rate is 35%. Find out net operating cash flow for Years 1, 2, and 3.

Year Rate Basis Depreciation
1 0.33 240 79
2 0.45 240 108
3 0.15 240 36
4 0.07 240 17
1 240

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M931861

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