Depreciable cost, Cost Accounting

A organization is evaluating a proposed 4-year project.  The depreciable cost will have the following: $300,000 for the equipment, $20,000 for shipping, and $30,000 for installation. The depreciation life is under the MACRS 3-year class, with a salvage value of $45,000. The inventories will increase by $18,000 and accounts payable will rise by $3,000. In addition, the new sales are estimated to be 150,000 units per year at $2.25 per unit. There is a variable operating cost that is 60% of sales and the company's marginal tax rate is 35%.  Do parts (a) through (c) below.

a) Verify the net operating cash flow for the initial year (Year 0).

b) Verify the net operating cash flow for Years 1, 2, and 3.

c) Verify the net terminal year cash flow.

Posted Date: 3/26/2013 9:03:56 AM | Location : United States

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