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Columbia Southern University Operations And Supply Chain Management Assignment Help - The depreciable cost


Question - A company is evaluating a proposed 4-year project. The depreciable cost will include the following:
$300,000 for the equipment, $20,000 for shipping, and $30,000 for installation. The depreciation life is
under the MACRS 3-year class, with a salvage value of $45,000. The inventories will rise by $18,000
and accounts payable will rise by $3,000. In addition, the new sales are estimated to be 150,000 units
per year at $2.25 per unit. There is a variable operating cost that is 60% of sales and the company's
marginal tax rate is 35%. Determine the net operating cash flow for the initial year (Year 0).

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