Bayshore Wines is considering expanding its winemaking operations. The expansion will require new equipment costing $708,000 that would be depreciated on a straight-line basis to a zero balance over the four-year life of the project. The equipment can be sold at salvage for $220,000 after the four years. The project requires $46,000 initially for additional networking capital, all of which will be returned at the end of the project. The projected operating cash flow is $211,500 a year. The required rate of return is 13%, and the tax rate is 34%.
1) What are the cash flows for the project? (5 points)
Question 1 options:
a. -754,000, 211,500, 211,500, 211,500, 402,700.
b. -754,000, 211,500, 211,500, 211,500, 191,500.
c. -708,000, 211,500, 211,500, 211,500, 402,700.
d. -708,000, 211,500, 211,500, 211,500, 191,500.
e. -708,000, 211,500, 211,500, 211,500, 257,500. Get Finance Help Today
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