A 4-year project has an annual operating cash flow of $56,500. At the beginning of the project, $4,750 in net working capital was required, which will berecovered at the end of the project. The firm also spent $23,400 on equipment to start the project. This equipment will have a book value of $5,060 atthe end of the project, but can be sold for $5,970. The tax rate is 35 percent. What is the Year 4 cash flow?Multiple ChoiceO$67,539$21,753$57,402$66,902$65,131

The net amount of cash that a firm generates or uses over the course of a given time is known as…

Answered: What is the Year 4 cash flow?

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What is the Year 4 cash flow?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 6PROB

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Concept explainers

Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.

Question

A 4-year project has an annual operating cash flow of $56,500. At the beginning of the project, $4,750 in net working capital was required, which will be
recovered at the end of the project. The firm also spent $23,400 on equipment to start the project. This equipment will have a book value of $5,060 at
the end of the project, but can be sold for $5,970. The tax rate is 35 percent. What is the Year 4 cash flow?
Multiple Choice
O
$67,539
$21,753
$57,402
$66,902
$65,131

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