Question
Autumn Leaves, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $758000. The fixed asset will be depreciated
Autumn Leaves, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $758000. The fixed asset will be depreciated straight-line to 70000 over its 3-year tax life, after which time it will have a market value of $137000. The project requires an initial investment in net working capital of $41000. The project is estimated to generate $164000 in annual sales, with costs of $149000. The tax rate is 0.22 and the required return on the project is 0.08. What is the operating cash flow in years 1 through 3?
Group of answer choices
A. $56,833.33
B. $62,153.33
C. $72,890.00
D. $101,920.00
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