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Horace's Horse Harness Co is considering a new project that will last for 3 years and whose data are shown below. . The company would purchase equipment at $200,000 plus $5,000 for installation costs. The equipment is classified in the 3-year class and will be depreciated under MACRS (The percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively). . The company believes that at the end of the 3rd year, the equipment can be sold for ${c). Net working capital will increase immediately by $30,000 and be recovered at the end of the project. Sales $175,000 . Other operating costs $ 40,000 . Tax rate 35% What are the annual operating cash flows for year 2? (HINT- you ONLY need to calculate OCF for year 2)
Question 2 (1 point) Briefly discuss the differences between cash flow and profit 1, which is more useful for financial decisions? 2. why? Blank #1 Blank #2 Question 3 (1 point) Horace's Horse Hamess Co is considering a new project t will last for 3 years and whose data are shown below The company would purchase equipment $200,000 plus $5,000 for installation costs The equipment is classified in the 3-year dess and will be depreciated under MACRS (The percentages are 33.33% 4435% 14.81% and 7.41% respectively) year, the equipment can be sold Net working capital will increase immediately by $30.000 and be recovered at the and of the project Sales $175.000 Other operating costs $40,000 Tax 35% The company believes that at the end of the for ( N 4 What are the annual operating cash flows for year 27 (ONT calculate OCF for year 2) Your Answer Answer Blank #1 Question 4 (1 point) With Capital Budgeting projects, many cash flows are a nsidered and some are not. 1. Define incremental cash flow 2. Define either complementary or erosion cash flow-state if it is an Incremental cost-give a brief example 3. Define sunk cost-state if it is an incremental cost give a brief example Blank #2 Blank #3 4 4 Question 5 (1 point) What are the cash flows to be considered in the final year of a project? end to 4 V 4