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ou are a part of a finance team in a firm, and you were asked by your boss to estimate the annual cash flows of a project. You estimated that the annual sales and costs of this project is $150,000 and $25,000 respectively. In order to start the project, the firm needs to invest in $300,000 in new equipment including shipping and installation, and $30,000 in working capital. The life of this asset is 3 years, and the project will be terminated after 3 years of operations. The equipment will depreciate via simplified straight-line method, and the estimated market value of the machine in 3 years is $20,000. The firm has a marginal tax rate of 22%. What is the total annual cash flow of the first year of this project

Answer :

basarmunsif5

Answer:

The answer is negative cash flow or net cash out flow of Rs. (205,000)

Explanation:

Annual sales   150,000  

Cost           (25,000)

Equipment   (300,000)

Working capital       (30,000)

 

Net cash out flows   (205,000)

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