Answer:
e. $20,075
Explanation:
The computation of the year 1 cash flow is shown below:
= Sales revenue - other operating cost - depreciation expenses - income tax expense + depreciation expenses
where,
Income tax expense = (Sales revenue - other operating cost - depreciation expenses) × income tax rate
= ($42,500 - $17,000 - $10,000) × 35%
= $5,425
And, the other items values would remain the same
Now put these values to the above formula
So, the value would equal to
= $42,500 - $17,000 - $10,000 - $5,425 + $10,000
= $20,075
