Menace Corporation is considering an investment in equipment for $50,000.Data related to the investment is as follows: Menace uses the straight-line method of depreciation with no mid-year convention.In addition, its tax rate is 40 percent and the life of the equipment is four years with no salvage value.Cost of capital is 12 percent.
What is the annual cash flow for Year 1?

Question

Menace Corporation is considering an investment in equipment for $50,000.Data related to the investment is as follows:  Menace uses the straight-line method of depreciation with no mid-year convention.In addition, its tax rate is 40 percent and the life of the equipment is four years with no salvage value.Cost of capital is 12 percent.
What is the annual cash flow for Year 1?

Quizplus · Accepted Answer

The Answer of Menace Corporation is considering an investment in equipment for $50,000.Data related to the investment is as follows:  Menace uses the straight-line method of depreciation with no mid-year convention.In addition, its tax rate is 40 percent and the life of the equipment is four years with no salvage value.Cost of capital is 12 percent.
What is the annual cash flow for Year 1?

Menace Corporation Is Considering an Investment in Equipment for $50,000