The following schedule reflects the incremental costs and revenues for a capital project. The company uses straight-line depreciation. The interest expense reflects an allocation of interest on the amount of this investment, based on the company’s weighted average cost of capital.

The annual cash flow from this investment, before tax considerations, would be

a. \($192,000.\)

b.  \($200,000.\)

c.   \( $262,000. \) 

d.   \($270,000.\) 

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Revenues. Direct costs.. Variable overhead Fixed overhead.. Depreciation.. General & administrative Interest expense. Total costs Net profit before taxes $650,000 $270,000 50,000 20,000 70,000 40,000 8,000 458,000 $192,000