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# I need help answering this question A \$1,000,000 investment is depreciated using a seven-year MACRS class life. It requires \$150,000 in additional

I need help answering this question

• A \$1,000,000 investment is depreciated using a seven-year MACRS class life.

• It requires \$150,000 in additional inventory and will increase accounts payable by \$50,000.

• It will generate \$400,000 in revenue and \$150,000 in cash expenses annually, and the tax rate is 40%.

• What is the incremental cash flow in years 0, 1, 7, and 8?

1 33.33 20.00 14.29 10.00 5.00 3.750
2 44.45 32.00 24.49 18.00 9.50 7.219
3 14.81 * 19.20 17.49 14.40 8.55 6.677
4 7.41 11.52 * 12.49 11.52 7.70 6.177
5   11.52 8.93 * 9.22 6.93 5.713
6   5.76 8.92 7.37 6.23 5.285
7     8.93 6.55 * 5.90 * 4.888
8     4.46 6.55 5.90 4.522
9       6.56 5.91 4.462 *
10       6.55 5.90 4.461
11       3.28 5.91 4.462
12         5.90 4.461
13         5.91 4.462
14         5.90 4.461
15         5.91 4.462
16         2.95 4.461
17           4.462
18           4.461
19           4.462
20           4.461
21

2.231

Given,
Initial Investment
Accounts Payable
Annual Revenue
Cash Expenses
Tax Rate \$1,000,000 Dep. Rate Year 1
\$150,000 Dep. Rate Year 7
\$50,000 Dep. Rate Year 8
\$400,000...

1 comment
• Please correct ... Incremental cash flow for year 8 will be \$267,840. Because working capital will also be recovered in Year 8.
• Finmaster81
• Jul 19, 2016 at 10:48pm

For 0=12,031 For... View the full answer

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