1.Driscoll & Geer is analyzing a 5-year project that has an initial cost for fixed assets of $1.6 million. This cost will be depreciated on a straight-line basis to a zero book value over the life of the project. At the end of the project, the assets will be worthless. The projected annual sales are $1.1 million and the total fixed and variable costs are $.96 million. The tax rate is 34 percent. What is the projects annual operating cash flow?

2. A major reason why operating cash flow is not equal to net income each year is?

A. accounting errors.

B. depreciation expense.

3. Two mutually exclusive projects are to be evaluated. Project #1 costs $10,000 today and returns $15,000 after one year. Project #2 costs $80,000 now and returns $100,000 after one year. Investors require a 10% return on either project. The best project is __________ because it has the higher __________.

A. #1; NPV

B. #1; IRR

C. #2; NPV

D. #2; IRR

C. tax deductibility of interest expense.

D. inflation.