Solution-What is the net after-tax income per year

What is the net after-tax income per year

Assignment Help Accounting Basics

Reference no: EM131879900

Problem - Capital Budgeting

Slowly Company has obtained the following information about a prepared project.

Future cash sales	$200,000
Future cash expenses	$140,000
Depreciation expense per year	$35,000
Estimated salvage value in 5 years	5,000
Cost of equipment	$180,000
Cost of capital	10%
Income tax rate	40%
Estimated useful life (in years)	5
Depreciation method	Straight-line
Present value of ordinary annuity at 10% for 5 periods	3.7908
Present value of a dollar at 10% for 5 periods	0.6209

Required:

A) What is the net after-tax income per year?

B) What is the annual after-tax cash flow from depreciation expense?

C) What is the NPV of the project?

Reference no: EM131879900

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What is the net after-tax income per year

Reference no: EM131879900

Reference no: EM131879900

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