Fm12 4 - $ 600,000 Add back depreciation 2,000,000 Operating cash flow $ 2,600,000 12-3 Equipment's original cost $20,000,000 Depreciation(80

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Answers and Solutions: 12 - 4 SOLUTIONS TO END-OF-CHAPTER PROBLEMS 12-1 Equipment $ 9,000,000 NWC Investment 3,000,000 Initial investment outlay $12,000,000 12-2 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
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Unformatted text preview: $ 600,000 Add back depreciation 2,000,000 Operating cash flow $ 2,600,000 12-3 Equipment's original cost $20,000,000 Depreciation (80%) 16,000,000 Book value $ 4,000,000 Gain on sale = $5,000,000 - $4,000,000 = $1,000,000. Tax on gain = $1,000,000(0.4) = $400,000. AT net salvage value = $5,000,000 - $400,000 = $4,600,000....
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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