Jack 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%, 45%, 15%, and 7% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project’s 10-year expected life. Net working capital required is $5,000. What is the Year 3 cash flow? Show work.
Equipment cost (depreciable basis) $95,000
Sales revenues, each year $65,000
Operating costs (excl. deprec.) $30,000
Tax rate 35%
