a) Your company, CSUS Inc., is considering a new project whose data are shown below....
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Finance
a) 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 $34,000 Operating costs (excl. depr.) $25,000 Tax rate 35.0%
b)Liberty Services is now at the end of the final year of a project. The equipment originally cost $26,500, of which 75% has been depreciated. The firm can sell the used equipment today for $6,000, and its tax rate is 40%. What is the equipments after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value, the firm will receive a tax credit as a result of the sale.
Group of answer choices
$6,250
$6,625
$7,750
$6,125
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