You just purchased some new equipment costing $459,000. The equipment is classified as 7-year property for
MACRS. What is the total accumulated depreciation expense at the end of year 2?
MACRS 7-year property
A proposed project is expected to decrease accounts receivable by $10,000, decrease inventory by $4,000, and
increase accounts payable by $6,000. What is the amount of the initial cash flow for this project?
Last year, Bottlers, Inc. purchased land located beside their factory at a price of $1,500,000 plus $250,000 in
real estate fees. Today, the land has a market value of $2,000,000. The company is now considering building a new
warehouse on that land. The construction cost of the warehouse is estimated at $675,000. In addition, $90,000 worth
of grading will be required to prepare the construction site. What is the initial cash flow of this project?
You are analyzing a proposed 4-year project. You expect to sell 20,000 units per year at an average selling
price of $5 per unit. The initial cash outlay for fixed assets will be $120,000. These assets will be depreciated using
straight-line depreciation to a zero book value over the life of the project. The fixed assets will be worthless at the
end of the project. Fixed costs are expected to be $8,000 and variable costs should be $1.90 per unit. The project
requires an initial investment in net working capital of $10,000 which will be recovered in full at the end of the