Projects year cash flow when revenue constant


Your company, CSUS Inc., is considering a new project whose data are shown below.  The required equipment has a 3-year tax life, and the accelerated 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 operating life.  What is the project's Year 4 cash flow?

Equipment cost (depreciable basis)

$70,000

Sales revenues, each year

$42,500

Operating costs (excl. deprec.)

$25,000

Tax rate

35.0%

a. $11,814
b. $12,436
c. $13,090
d. $13,745
e. $14,432

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Finance Basics: Projects year cash flow when revenue constant
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