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# Forecast the cash flow streams associated with the following equipment purchases. Tax rate is 35%.

Forecast the cash flow streams associated with the following equipment purchases. Tax rate is 35%.
Original cost of \$750,000, depreciated straight-line to an ending book value of \$150,000 at the end of year 3, scrapped for \$60,000 at the end of year 5, scrap value expressed in today's dollars. Projected inflation is 4% per year.

SOLUTION:
Depreciation = (\$750,000 - \$150,000) / 3
Depreciation \$200,000.00 Scrap Value in today's dollars = \$60,000 / (1 + 4%) ^ 5
Scrap Value in today's dollars
Particulars \$49,315.63
0...

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