What is the annual net cash receipts


Problem: Rucci Inc. is considering a project that would require an initial investment of $462,000 and would have a useful life of 7 years. The annual cash receipts would be $300,000 and the annual cash expenses would be $120,000. The salvage value of the assets used in the project would be $69,000. The company's tax rate is 30%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 5 years. The company uses a discount rate of 18%.

Required to do:

1) What is the annual NET Cash Receipts?

2) What is the annual Depreciation Deduction?

3) What is the Net Present Value for this project?

Solution Preview :

Prepared by a verified Expert
Finance Basics: What is the annual net cash receipts
Reference No:- TGS01811379

Now Priced at $25 (50% Discount)

Recommended (97%)

Rated (4.9/5)