Fool Proof Software is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life.
Equipment Cost (depreciable basis) $42,000
Sales Revenue, each year $60,000
Operating Costs (excl. depr.) $25,000
Tax Rate 35.0 %
What is the Year 1 cash flow? Please show me how you got that answer.