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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.

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Finance-8196545.xls

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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