PS6_Solution

PS6_Solution - (2 Equipment's original cost $20,000,000...

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PS6_Solution (1) Operating Cash Flows: t = 1 Sales revenues $10,000,000 Operating costs 7,000,000 Depreciation 2,000,000 Operating income before taxes $ 1,000,000 Taxes (40%) 400,000 Operating income after taxes $ 600,000 Add back depreciation 2,000,000 Operating cash flow $ 2,600,000
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Unformatted text preview: (2) Equipment's original cost $20,000,000 Depreciation (80%) 16,000,000 Book value $ 4,000,000 Gain = $5,000,000 - $4,000,000 = $1,000,000 Tax on gain = $1,000,000(0.4) = $400,000 After-tax net salvage value = $5,000,000 - $400,000 = $4,600,000....
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This homework help was uploaded on 04/18/2008 for the course FIN 332 taught by Professor Dasilva during the Spring '08 term at CSU Fullerton.

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