Today. you are evaluating a 3-year investment opportunity in a motorcycle service that will shuttle people between Upper chicago and naperville on weekend nights. the purehace price is $450K and includes all relevant costs associated with the implementation of the machine (such as shipping and assembly) the asset's book value will be- straight line depriciated down to an end-of-life book value of $50K. despite the feet that its anticipated salvage value (i.e.. selling price) is $30K. Net working capital (NWC) is expected to increase by $20K at t=0 and decline by $20K at t=3.
The carriage service is ex- pected to provide cash sales of $300K per year, and will require cash expenses of $75K each year, the relevant marginal tax rate for this analysis is 30%.
Your task is to use the following equation to identify all relevant cash flows and then calculate cash flows for all relevant points of time in your horizon: t=0, t=l. t=2., t=3(oper.) and t=3(term.)
I understand how to do most of it, I am not uderstanding how to calculate depriciation expense - please show this step in detail.