Problem
Whitestone Products is considering a new project whose data are shown below. The required equipment has a 4-year tax life, and the straight-line method is used 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 5 cash flow?
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Equipment cost (depreciable basis)
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$50,000
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Sales revenues, each year
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$42,500
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Operating costs (excl. deprec.)
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$25,000
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Tax rate
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35.0%
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