Question
9) What is the expected OPERATING CASH FLOW FOR YEAR 2 of a project given the following information. To undertake the project, $308,000 must be
9) What is the expected OPERATING CASH FLOW FOR YEAR 2 of a project given the following information. To undertake the project, $308,000 must be spent on new equipment. The equipment has a expected life of 6 years and will be depreciated straight line over that same period to a book value of 0. New annual sales of $206,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 43% of sales. Fixed cash operating expenses are $64,000 per year. Tax rate is 29%.In the event EBIT is negative, the firm would have a tax credit based on the 29% tax rate. A) 41723.74 B) 44892.64 C) 47005.23 D) 39611.15 E) 52814.87 F) 52301.53
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