Company A wants to set up a new factory.
Building Cost = 30,000 (assume straight-line depreciation over 30 yrs with no salvage value)
Equipments and Installation cost = 15,000 (assume straight-line depreciation over 10 yr with no salvage value)
Initial Working Capital Investment = 10,000
At the end of the project's economic life (5years)
The building is estimated to have a market value of 18,000 and a book value of 20,000
The equipmente are expected to also have a market value of 7,500 and a book value of 5,000.
Given estimated annual revenue of 50,000 and annual production cost of 25,000. Also, assume a marginal tax rate of 25%.
Find each of these; 1- Initial investment outlay: 2- Project cash flow from operations: 3- The cash flow at the end of the project