Finance Problem - Is There Enough Information to Solve?
Suppose you are considering investing in a landscaping business. The cost of the equipment is $80,000 and you will need to invest another $20,000 in net working capital. You estimate that the business will generate net income of $15,000 each year over the next five years. At the end of five years, you will sell the equipment and client list for an estimated $50,000 after taxes and the working capital you invested at the beginning of the project will be released (liquidated) for $20,000. All assets will be depreciated using straight line depreciation over 5 years. Calculate the annual cash flows associated with this investment over its life.© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/finance-problem-is-there-enough-information-to-solve-7ff7
...d, the company incurs an expense of 80,000 and 20,000 for a net expense of 100,000.
t=1 to t=4:
Company will generate net income of 15,000. However, you will first deduct depreciation of (80,000-50,000)/5= 6,000 to get a after ...