Morgado Inc. has provided the following data to be used in evaluating a proposed
ID: 2378514 • Letter: M
Question
Morgado Inc. has provided the following data to be used in evaluating a proposed investment project:
Initial investment
$300,000
Annual cash receipts
$95,000
Life of the project
5 year
Annual cash expenses
$60,000
Salvage value
$31,000
The company's tax rate is 31%. For tax purposes, the entire initial investment will be depreciated over 8 years without any reduction for salvage value. The company uses a discount rate of 11%.
When computing the net present value of the project, what is the after-tax cash flow from the salvage value in the final year?
Initial investment
$300,000
Annual cash receipts
$95,000
Life of the project
5 year
Annual cash expenses
$60,000
Salvage value
$31,000
Explanation / Answer
Book value after 8 years 0
after-tax cash flow from the salvage value = SP
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.