Problem:
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 MACRS 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 life. What is the operating cash flow for Year 1?
Sales Revenues, Each Year: $60,000
Equipment Cost [Depreciable Basis]: $65,000
Operating Costs Excluding Depreciation: $25,000
Tax Rate: 35.0%