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Fitzgerald Computers is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years for a yearly rate of 33.333%. Revenues and other operating costs are expected to be constant over the project’s 3-year life. What is the project’s Year 1 cash flow? Equipment cost (depreciable basis) $62,334 Sales revenues, each year $52,034 Operating costs (excl. deprec.) $22,037 Tax rate 35.0%

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Fitzgerald Computers is considering a new project whose data are shown

below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years for a yearly rate of 33.333%. Revenues and other operating costs are expected to be constant over the project’s 3-year life. What is the project’s Year 1 cash flow?

Equipment cost (depreciable basis)   $62,334
Sales revenues, each year   $52,034
Operating costs (excl. deprec.)   $22,037
Tax rate   35.0%

 
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