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(3 pts) An expansion project requires $500,000 of upfront capital costs to purchase and install new machinery. The machinery will be depreciated straight-line to zero
(3 pts) An expansion project requires $500,000 of upfront capital costs to purchase and install new machinery. The machinery will be depreciated straight-line to zero over a 5 year life. The New project is expected to increase sales by $320,000 per year for the next five years. Variable costs are expected to be $160,000 per year and fixed costs are expected to be $70,000 per year. The appropriate tax rate is 35%. What is the amount of the change in the firm's operating cash flow per year resulting from this project? 3)
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