Calculate the expected net cash flow of the project

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Reference no: EM131184593

Consider a capital expenditure project with an expected 10-year economic life and forecasted revenues equal to $40,000 per year;

cash expenses are estimated to be $29,000 per year.

The cost of the project equipment is $23,000, and the equipment's estimated salvage value at the end of the project is $9000.

The equipment's $23,000 cost will be depreciated using MACRS depreciation (7-year asset).

The project requires a $7,000 working capital investment in year 0 and another $5,000 in year 5.

The company's marginal tax rate is 40%. Calculate the expected net cash flow in year 10 of the project.

Reference no: EM131184593

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