A company that is dedicated to offering consulting services acquired a building at a cost of $5,000,000 and buy furniture at a cost of $200,000. This company estimates that it will generate income upward to $350,000 for the first year, with an increase of $10,000 annual and operational costs will be $165,000 per year. Operations began February 1, 2017 and shall cease operations June 1, 2025.
a. Assume that at the end of the depreciable life of furniture, sells it by 15% of the cost. Recalculate the cash flow after taxes taking into account this income. Only the line corresponding to the last year.
b. presumes that you are considering having the furniture during the third year. Determine the lost profit if the market value is $110,000. Assume that the company uses MACRS method to calculate the corresponding depreciation charges.