Golden flights inc is considering buying some specialized

Reference no: EM13595794

Golden Flights, Inc., is considering buying some specialized machinery that would enable the company to obtain a six-year government contract for the design and engineering of a futuristic plane. The machinery costs $975,000 and must be destroyed for security reasons at the end of the six-year contract period. The estimated annual operating results of the project are as follows:

Revenue from sales under the contract $975,000
Expenses other than depreciation $560,000
Depreciation (straight-line basis) 162,500 (722,500)
Increase in net income from government contract $252,500

All revenue from the contract and all expenses will be received or paid in cash in the same period as recognized for accounting purposes. You are to compute the following three factors for this project:

Reference no: EM13595794

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