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  3. a company expects to have earnings before interest

A company expects to have earnings before interest and taxes (UAII) of $ 160,000 in...

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Accounting

A company expects to have earnings before interest and taxes (UAII) of $ 160,000 in each of the following 6 years. Pay annual interest of $ 15,000. The firm is considering the purchase of an asset that costs $ 140,000, requires $ 10,000 of installation costs and has a 5-year payback period. It will be the sole asset of the company and the depreciation for years 5 and 6 is $ 18,000 and $ 7,500, respectively The company is subject to a 40% tax rate on all profits it makes. The net fixed assets, current assets, accounts payable and accumulated debts of a company have the values indicated below, at the beginning and end of the last year (year 6).

START END
YEAR 6 YEAR 6 
 Net fixed assets
7,500 0 
Current assets
90,000 110,000 
 Accounts payable
 40,000 45,000 
Accumulated debts
8,000 7,000

Operating cash flow at the end of the fifth year (FEO) equals : ____________

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