Compute what is the equipments after-tax net salvage value

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The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service:

Projected sales$24 million

Operating costs (not including depreciation)$8 million

Depreciation$5 million

nterest expense$4 million

Question 1: The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.

Question 2: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 65% has been depreciated. The used equipment can be sold today for $4.8 million, and its tax rate is 25%. What is the equipment's after-tax net salvage value? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar.

Reference no: EM132496054

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