Company is planning to buy a machinery at a cost of $20 million. This machine will be used for 10 years. The machine will bring additional revenue as follows:
$10 million for first 6 years and $7 million for the last 4 years
Expenses = 60% of revenue for all 10 years
After 10 years the machine will be sold for an estimated price of $2 million and the estimated selling expense is $400,000.
Tax rate = 20%
A. Find the net cash flow for t = 0
B. Find the after tax cash flow for each year from year 1 to year 10.
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