Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Fitzgerald Computers is considering a new project whose data are shown below. The required equipment has a 4-year
tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 4 years. Revenues
and other operating costs are expected to be constant over the project's 4-year life. What is the project's Year 1 cash
flow?
Equipment cost (depreciable basis)
Straight-line depreciation rate
Sales revenues, each year
Operating costs (excl. deprec.)
Tax rate
a. $27,500
b. $28,438
c. $22,750
d. $30,333
e. $21,000
$65,000
25.00%
$60,000
$25,000
40.0%
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Transcribed Image Text:Fitzgerald Computers is considering a new project whose data are shown below. The required equipment has a 4-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 4 years. Revenues and other operating costs are expected to be constant over the project's 4-year life. What is the project's Year 1 cash flow? Equipment cost (depreciable basis) Straight-line depreciation rate Sales revenues, each year Operating costs (excl. deprec.) Tax rate a. $27,500 b. $28,438 c. $22,750 d. $30,333 e. $21,000 $65,000 25.00% $60,000 $25,000 40.0%
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