Whitestone Products Is Considering a New Project Whose Data Are

question 70

Multiple Choice

Whitestone Products is considering a new project whose data are shown below.The required equipment has a 3-year tax life,and the accelerated 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 operating life.What is the project's Year 4 cash flow? $$\begin{array} { l l } \text { Equipment cost (depreciable basis) } & \$ 70,000 \\\text { Sales revenues, each year } & \$ 42,500 \\\text { Operating costs (excl. deprec.) } & \$ 25,000 \\\text { Tax rate } & 35.0 \%\end{array}$$

• A)$11,904
• B)$12,531
• C)$13,190
• D)$13,850
• E)$14,542

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