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Business, 13.08.2020 17:01 jake56555

Outback Beverages is considering a project for a new beverage called Koala-Kola. The project would require new assets today costing $200,000 that would be written off immediately under the new tax laws since Outback anticipates having enough other income to write this cost off against. Additional net working capital of $10,000 would be needed at the beginning of the project’s life. The project has a 4-year expected useful life with an expected salvage value of $50,000 and a book value of zero at the end of the 4-year expected useful life. Outback expects Koala-Kola annual sales of $90,000 and annual operating costs of $30,000 during the 4-year life of the project. Outback Beverages marginal tax rate is 25% and their WACC is 10%. What is the total year 4 (operating plus terminal) cash flow for the Koala-Kola project?

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Outback Beverages is considering a project for a new beverage called Koala-Kola. The project would r...
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