Use the information below to answer the following questions.
Han Ltd supplies chilli paste to large supermarket chains. The company is currently considering scrapping the old processor and investing in a new processor. Information about the investment is as follows: $$\begin{array} { l r }
\text { Initial investment in processor } & \$ 105,000 \
\text { Operating cash flows over next 5 years: } & \
\quad \text { Cash receipts } & \$ 80,000 \
\quad \text { Cash payments } & \$ 40,000 \
\text { Residual value of processor in 5 years } & \$ 5,000 \
\text { Required rate of return } & 8 \% \
\text { Depreciation per antum } & \$ 20,000
\end{array}$$
-Refer to the table above. What is the annual net cash flow in year 5?

Question

Use the information below to answer the following questions.
Han Ltd supplies chilli paste to large supermarket chains. The company is currently considering scrapping the old processor and investing in a new processor. Information about the investment is as follows: $$\begin{array} { l r } 
\text { Initial investment in processor } & \$ 105,000 \
\text { Operating cash flows over next 5 years: } & \
\quad \text { Cash receipts } & \$ 80,000 \
\quad \text { Cash payments } & \$ 40,000 \
\text { Residual value of processor in 5 years } & \$ 5,000 \
\text { Required rate of return } & 8 \% \
\text { Depreciation per antum } & \$ 20,000
\end{array}$$
-Refer to the table above. What is the annual net cash flow in year 5?

Quizplus · Accepted Answer

The annual net cash flow in year 5 is $45,000. This is calculated by taking the cash receipts of $80,000, subtracting the cash payments of $40,000, and adding the depreciation of $20,000.

Use the Information Below to Answer the Following Questions -Refer to the Table Above