Calculation of net cash flow
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Garfield, Inc., is considering a thirteen year investment project with forecasted cash revenues of $41,000 per year and forecasted cash expenses of $30,000 per year. The initial cost of the equipment for the project is $28,000. The salvage value of the equipment is $9,000 at the end of the thirteen years of the project. The net book value of the equipment for tax purposes will be zero at the end of the thirteen years. The project requires a working capital investment of $7,800 at its inception and another working capital infusion of $2,100 at the end of year eight. All of this working capital would be released for use elsewhere at the end of the project. The company's tax rate is 40%. What is the after-tax net cash flow in the thirteenth year of the project?
$16,100
$34,400
$21,900
$30,800
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Solution Summary
The ansnwer contains the computation of after net cash flow of an investment project
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