Attempts: 2 Keep the Highest: 2/4 Aa Aa E. 2. Incremental costs Initial and term
ID: 2709433 • Letter: A
Question
Attempts: 2 Keep the Highest: 2/4 Aa Aa E. 2. Incremental costs Initial and terminal cash flow at requires an investment in new equipment of $3,600,000, with Newc an ad costs. Newcastle estimates that its accounts receivable and t the new project, some of which is financed by a $288,000 nVen e and accruals ncre The t and consists of the price of the new equipment plus the In co Suppose Newcastle's new equipment is expected to sell for $600,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net working capital investment. The company chose to use straight-line depreciation, and the new equipment was fully depreciated by the end of its useful life. If the firm's tax rate is 40%, what is the project's total termination cash flow? $792,000 O $600,000 O $360,000 $672,000 Flash Player WIN 19 0,0,226 Q3 3.33 2004-2015 Aplia. All rights reserved.Explanation / Answer
Terminal cash flow:
= $600,000×(1-40%)
= $360,000
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