Champlain Transportation Inc.is considering a six-year project that requires $800,000 for the purchase of a capital asset with a CCA rate of 30 percent.The project is expected to generate sales revenue of $600,000 per year.The project's variable and fixed costs are estimated at $240,000 and $50,000 per year,respectively.The firm's marginal tax rate is 35 percent and cost of capital is 12 percent.What is the present value of the after-tax operating cash flows?

Question

Quizplus · Accepted Answer

PV(CFAT)= $(600,000 - 240,000 - 50,000)*(1 - 35%)*PVAF(12%,6)= $828,449