Consider a project that requires investing $10,000 in an asset that is classified as a 3-year asset for tax purposes. The project's useful life is three years, at which time the asset will be disposed of without generating any cost of sales proceeds. The project will increase revenues by $3,800 each year, and there will be no change in operating expenses or working capital associated with this project. If the investing company's marginal tax rate is 30 percent and the appropriate cost of capital for this project is 10 percent. The project's net cash flow for the second year of operations is closest to:

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The Answer of Consider a project that requires investing $10,000 in an asset that is classified as a 3-year asset for tax purposes. The project's useful life is three years, at which time the asset will be disposed of without generating any cost of sales proceeds. The project will increase revenues by $3,800 each year, and there will be no change in operating expenses or working capital associated with this project. If the investing company's marginal tax rate is 30 percent and the appropriate cost of capital for this project is 10 percent. The project's net cash flow for the second year of operations is closest to:

Consider a Project That Requires Investing $10,000 in an Asset