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The Wet Corp. has an investment project that will reduce expenses by $30,000 per year for...

The Wet Corp. has an investment project that will reduce expenses by $30,000 per year for 3 years. The project's cost is $25,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's tax rate is 25%, what is the cash flow from the project in year 1?

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Answer #1
Savings in expenses 30000
Less: Dep (25000*33.33%) 8332.5
Net Income before tax 21667.5
Less: tax @ 25% 5416.875
After tax Income 16250.63
Add: Depreciation 8332.5
Annual cashflows 24583.13
Answer is $ 24583.13
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