Homework Answers
Answer is $12,144
Year 1:
Cost Saving = $15,000
Depreciation = $6,600
Tax Rate = 34%
Cash Flow = Cost Saving * (1 - Tax Rate) + Tax Rate *
Depreciation
Cash Flow = $15,000 * (1 - 0.34) + 0.34 * $6,600
Cash Flow = $15,000 * 0.66 + 0.34 * $6,600
Cash Flow = $12,144
So, the expected cash flow for year one is $12,144
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