# A company is evaluating a proposed 4-year project

Question # 00004837 Posted By: mac123 Updated on: 12/07/2013 04:46 AM Due on: 12/30/2013
Subject Accounting Topic Accounting Tutorials:
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A company is evaluating a proposed 4-year project. The depreciable cost will include the following: \$300,000 for the equipment, \$20,000 for shipping, and \$30,000 for installation. The depreciation life is under the MACRS 3-year class, with a salvage value of \$45,000. The inventories will rise by \$18,000 and accounts payable will rise by \$3,000. In addition, the new sales are estimated to be 150,000 units per year at \$2.25 per unit. There is a variable operating cost that is 60% of sales and the company’s marginal tax rate is 35%. Complete parts (a) through (c) below.
a) Determine the net operating cash flow for the initial year (Year 0).
b) Determine the net operating cash flow for Years 1, 2, and 3.
c) Determine the net terminal year cash flow.
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Tutorial # 00004632 Posted By: mac123 Posted on: 12/07/2013 04:48 AM
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