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Vikentia [17]
2 years ago
8

Your company, CSUS Inc., is considering a new project whose data are shown below. The required equipment has a 3-year tax life,

and the accelerated rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected operating life. What is the project's Year 4 cash flow?Equipment cost (depreciable basis) $70,000Sales revenues, each year $42,500Operating costs (excl. depreciation) $25,000Tax rate 35.0%a. $11,814b. $12,436c. $13,090d. $13,745e. $14,432

Business
2 answers:
GalinKa [24]2 years ago
5 0

Answer:

c. $13,090

Explanation:

Please see attachment

Misha Larkins [42]2 years ago
4 0

Answer:

cash flow  = $13090

Explanation:

given data

Equipment cost=  $70,000

Sales revenues = $42,500

operating costs = $25,000

Tax rate = 35.0%

solution

we know that MCAR for 7 % is

MCAR  = 7% of 70000 = $4900

and

sale rev is 42000

so

EBITDA = sale rev - operating cost

EBITDA =  42500 - 25000

EBITDA  = $17500

and

EBIT = 17500 - 4900

EBIT = 12600

and

tax is 35 % that is = 4410

and

PAT = EBIT - tax

PAT = 12600 - 4410

PAT = 8190

so

cash flow = 8190 + 4900

cash flow  = $13090

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