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Toronto Skates Corp. is considering a five-year project that requires an initial investment of ...

Toronto Skates Corp. is considering a five-year project that requires an initial investment of $250,000. The project is expected to generate operating incomes of $60,000 in year 1, $90,000 in year 2, $150,000 in year 3, $100,000 in year 4, and $80,000 in year 5. The asset belongs to asset class 7, which has a CCA rate of 15%. The firm's marginal tax rate is 35% and cost of capital is 10%. Ignoring CCA, what is the present value of the after-tax operating cash flows?

▸ $205,272

▸ $315,804

▸ $359,598

▸ $233,739

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Corporate Finance

Edition: 5^th

Author: Booth

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