Answer:
b. $27,175
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
= ($62,500 - $25,000 - $8,000) × 35%
= $10,325
And, the other items values would remain the same
Now put these values to the above formula
So, the value would equal to
= $62,500 - $25,000 - $8,000 - $10,325 + $8,000
= $27,175
