Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow?
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Equipment cost (depreciable basis)
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$65,000
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Straight-line depreciation rate
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33.333%
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Sales revenues, each year
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$60,000
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Operating costs (excl. deprec.)
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$25,000
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Tax rate
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35.0%
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a. $28,115
b. $28,836
c. $29,575
d. $30,333
e. $31,092