You are evaluating the proposed acquisition of a new computer. The computer's price is $40,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net operating working capital of $ 4 ,000. The computer would increase the firm's before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 3 years and then be sold for $ 19 ,000. The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent.
What is the total value of the terminal year non-operating cash flows at the end of Year 3? Round it to a whole dollar, and do not include the $ sign.
|
Year
|
MACRS Percent
|
|
1
|
0.33
|
|
2
|
0.45
|
|
3
|
0.15
|
|
4
|
0.07
|