Question

A 4-year project has an annual operating cash flow of $48,500. At the beginning of the project, $3,950 in net working capital was required, which will be recovered at the end of the project. The firm also spent $21,800 on equipment to start the project. This equipment will have a book value of $4,420 at the end of the project, but can be sold for $5,490. The tax rate is 21 percent. What is the Year 4 cash flow?

Answer 1

Answer: Cash flow = $58,680

Step-by-step explanation: You add $49,500 + 4,050 + 5,550 + .40($4,500 − 5,550)