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QUESTION
Konrad, Inc. is considering a new project whose data are shown below. The required equipment has a 3-year tax life and it will be depreciated by the...
Konrad, Inc. is considering a new project whose data are shown below. The required equipment has a 3-year tax life and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow?
Annual sales revenues$180,000Annual operating costs, excluding depreciation$85,000Equipment Cost (depreciable basis)$120,000Years straight-line depreciation3Tax rate30%
RevenueCostDepreciationOperating IncomeLess: TaxNet Operating IncomeAdd: DepreciationCash Flow Year 118000085000400005500016500385004000078500