Mechanicsville is planning to invest on a new project whose data are shown below. The...
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Mechanicsville is planning to invest on a new project whose data are shown below. The equipment has a 3-year tax life; depreciation method to be used is the straight-line method over the 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 Operating cash flow?
Equipment cost (depreciable basis) $65,000
Straight-line depreciation rate 33.333%
Sales revenues, each year $60,000
Operating costs (excl. deprec.) $25,000
Tax rate 30.0%
Salvage Value $0
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