A firm is considering a project that is forecasted to cost $100 initially. Annually the project will have operating costs of $5 per year and revenues of $38.5 per year. The annual depreciation is expected to be $25 in years 1-4. Charges for depreciation will end after year four. Taxes are 30%. What is the operating cash flow in year five?

A firm is considering a project that is forecasted to cost $100 initially. Annually the project will have operating costs of $5 per year and revenues of $38.5 per year. The annual depreciation is expected to be $25 in years 1-4. Charges for depreciation will end after year four. Taxes are 30%. What is the operating cash flow in year five?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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