Question

After-tax Cash Flows You have been hired by a company and asked to compute the after-tax...

After-tax Cash Flows

You have been hired by a company and asked to compute the after-tax cash flows for a new product.

This product will:

  • Increase EbDT by $30,000 for 10 years.
  • The equipment will be depreciated $25,000 per year for years 1 through 4 to zero Book Value.
  • At the end of the product’s life the equipment will be sold for scrap for $20,000

The Company’s tax rate is 30%

Compute the cash flows for this project.

Years 1 through 4 _________

Years 5 through 9 _________

Year 10 _________

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