Determine the estimated after-tax cash flow

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Reference no: EM131810397

Tampa Electric Company (TECO) is planning a major upgrade in its computerized demand management system. In order to accommodate this upgrade, a building will be constructed on land already owned by the company. The building is estimated to cost $1.8M and will be opened in August 2010. The computer equipment for the building will cost $2.75M, and all office equipment will cost $225,000. Annual expenses for operating this facility (labor, materials, insurance, energy, etc.) are expected to be $325,000 during 2010. Use of the new demand management system is expected to decrease fuel and other costs for the company by $1.8M in the first year (2010). If the company expects to earn 9% on its investments, is in the 35% tax bracket, and uses a 20-year planning horizon, determine the estimated after-tax cash flow from this project in 2010. Contributed by Paul R. McCright, University of South Florida

Reference no: EM131810397

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