Consider a capital expenditure project with an expected 10-year economic life and forecasted revenues equal to $40,000 per year;
cash expenses are estimated to be $29,000 per year.
The cost of the project equipment is $23,000, and the equipment's estimated salvage value at the end of the project is $9000.
The equipment's $23,000 cost will be depreciated using MACRS depreciation (7-year asset).
The project requires a $7,000 working capital investment in year 0 and another $5,000 in year 5.
The company's marginal tax rate is 40%. Calculate the expected net cash flow in year 10 of the project.