Your New Employer, Freeman Software, Is Considering a New Project

question 65

Multiple Choice

Your new employer, Freeman Software, is considering a new project whose data are shown below.The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33.33%, 44.45%, 14.81%, and 7.41% for Years 1 through 4.Revenues and other operating costs are expected to be constant over the project's 10-year expected life.What is the Year 1 cash flow? $\begin{array}{lr}\text { Equipment cost (depreciable basis) } & \$ 65,000 \\\text { Sales revenues, each year } & \$ 60,000 \\\text { Operating costs (excl. deprec) } & \$ 25,000 \\\text { Tax rate } & 25.0 \%\end{array}$

• A) $31,666
• B) $31,849
• C) $33,442
• D) $35,114
• E) $36,869

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Definitions:

Recreational Activities

Activities carried out during leisure time for enjoyment, amusement, or pleasure, aiming to relax, entertain, and often provide physical or mental health benefits.

Technology

The application of scientific knowledge for practical purposes, especially in industry and in our daily lives.

Third Places

Public spaces, besides home (first place) and work (second place), where people socialize, like cafes or parks.

Leisure

The enjoyment of free time with activities outside of work and daily responsibilities, often for enjoyment, entertainment, and relaxation.