Total cash flow of the project if the equipment can be sold

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Reference no: EM131931493

Question: ABC, Inc is planning the purchase of a new equipment which will cost $24,216. The project is expected to last for 6 years. The equipment will have a book value of $2,971 at the end of Year 6. The increase in net working capital is expected to be $3,583, all of which will be recouped at the end of the project. The project is expected to have annual operating cash flows of $16,518. What is the Total Cash Flow in Year 6 of the project if the equipment can be sold for $6,319 and the tax rate is 33%?

Note: In the last year of the project, the Total Cash Flow = Operating Cash Flow + Terminal Cash Flow

Reference no: EM131931493

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