Ontario Courier Service is considering investing in a capital asset that costs $64,000.The project also requires an investment in net working capital of $8,000.The project will generate annual after-tax operating income of $20,800 for the next four years.The asset has a CCA rate of 20%, with the half-year rule applicable in the first year and is expected to sell for $7,200 at the end of four years.The firm's cost of capital is 15% and marginal tax rate is 35%.Assume the asset class remains open after the asset is sold.What is the after-tax cash flow (ECF)in the final year of the project?

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The Answer of Ontario Courier Service is considering investing in a capital asset that costs $64,000.The project also requires an investment in net working capital of $8,000.The project will generate annual after-tax operating income of $20,800 for the next four years.The asset has a CCA rate of 20%, with the half-year rule applicable in the first year and is expected to sell for $7,200 at the end of four years.The firm's cost of capital is 15% and marginal tax rate is 35%.Assume the asset class remains open after the asset is sold.What is the after-tax cash flow (ECF)in the final year of the project?

Ontario Courier Service Is Considering Investing in a Capital Asset