What is the total cash flow for year three

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Reference no: EM131837446

1. Tom s is considering a 3-year project with an initial cost of $876,000. The project will not directly produce any sales but will reduce operating costs by $210,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $585,000. The tax rate is 34 percent and the required return is 9 percent. An extra $48,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3?

A. $592,782.87

B. $611,208.19

C. $634,722.34

D. $683,765.14

E. $755,037.65

2. Lumber Wholesale purchased some fixed assets four years ago at a cost of $47,500. It no longer needs these assets, so it is going to sell them today at a price of $21,000. The assets are classified as 5-year property for MACRS. The MACRS table values .2000, .3200, .1920, .1152, .1152, and .0576 for Years 1 to 6, respectively. What is the current book value of these assets?

A. $1,250.47

B. $2,763.47

C. $3,782.91

D. $7,156.35

E. $8,208.00

Reference no: EM131837446

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