Champlain Transportation Inc.is considering a five-year project that requires an initial capital investment of $1 million.The project is expected to generate operating revenue of $500,000 per year,and the associated operating expenses are estimated at $250,000 per year.The capital asset belongs to asset class 9,which has a CCA rate of 30 percent.The firm's marginal tax rate is 35 percent.What is the after-tax cash flow for year 1?

Question

Quizplus · Accepted Answer

CCATS₁ = $1,000,000*(30%/2)*35% = $52,500 CFAT₁ = $(500,000 - 250,000)*(1 - 35%)+ $52,500 = $215,000