Company Q is considering a project which needs an equipment. The cost of the equipme
is $350,000. This equipment will be depreciated for five years on a straight-line basis
zero-salvage value. The market value of the equipment at the end of the fifth year
$25,000. Initial investment in working capital is $22,000. Annual sales and operating cost
(excluding depreciation) from this project are $175,000 and 93,000 respectively. Compan
W
pays tax at 40%.
The annual operating cash flow from this project is:
a. $75,200
b. $64,000
c. $62.000
d. $77.200
Answer:
I think the answer is a
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