Your new employer, Freeman Software, is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33.33%, 44.45%, 14.81%, and 7.41% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 1 cash flow?

Equipment cost (depreciable basis) $65,000 Sales revenues, each year $60,000 Operating costs (excl. deprec.) $25,000 Tax rate 25.0%

ABC Corp is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life at 33 1/3% per year. The economic life of the project is four years, and the equipment would be estimated to sell at $20,000 at the end of the four years. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 4-year life. What is the project's NPV?

Risk-adjusted WACC

16.0%

Net investment cost (depreciable basis)

$90,000

Straight-line deprec. rate

33.3333%

Sales revenues, each year

$65,000

Operating costs (excl. deprec.), each year

$25,000

Tax rate

35.0%

$8,651

$9,924

$11,881

$13,514

$19,325

Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless. Under the new tax law, the equipment is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. Revenues and operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number. Equipment cost (depreciable basis) $100,000 Sales revenues, each year $60,000 Operating costs $25,000 Tax rate 25.0%

a. $26,250

b. $28,222

c. $29,598

d. $33,040

e. $32,008