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7) BAD Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.32 million. The fixed asset will be
7)
BAD Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.32 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless (TIP: "worthless" = not sold, and so no sales proceeds are generated). The project is estimated to generate $3,840,000 in annual sales, with costs of $1,536,000. |
If the tax rate is 23 percent, what is the OCF for this project? |
Multiple Choice
$2,105,280
$665,280
$2,304,000
$2,210,544
$2,000,016
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