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7 November, 10:49

Your company, RMU Inc., is considering a new project whose data are shown below. What is the project's Year 1 cash flow? Sales revenues $22,250Depreciation $8,000Other operating costs $12,000Tax rate 35.0%a. $ 8,903b. $ 9,179c. $ 9,463d. $ 9,746e. $10,039

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  1. 7 November, 13:16
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    c. $ 9,463

    Explanation:

    operating income = sale - operating costs - depreciation

    = $22,250 - $12,000 - $8,000

    = $2250

    cash flow for year 1 = operating income - tax + depreciation

    = 2250 - 2250*35% + 8000

    = 2250 - 787.5 + 8000

    = $9462.5

    Therefore, The project's Year 1 cash flow is $9462.5
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