Fieldgard Inc. invested $800,000 in a project nine years ago.
This project has generated $320,000 cash revenues per year and
incurred $250,000 cash operating costs each year. The project
qualified as 7-year property under MACRS (modified accelerated cost
recovery system). Salvage value of this project (at the end of the
tenth, and final, year of the project's life) is expected to be
$200,000. The project required $80,000 net additional working
capital at its inception and another $60,000 at the end of year 5.
The combined increased working capital commitment is expected to be
fully recoverable when the project terminates. The company is
subject to a combined 40% income tax rate, t.
Required:
What is the expected total after-tax cash flow expected from this
project next year (i.e., during the 10th and final year of the
project's life)? Round answer to nearest whole number.
Get Answers For Free
Most questions answered within 1 hours.