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Diamond Club wants to expand its facility. The expansion will require $400,000 in building improvements that will be depreciated on a straight-line basis over a
Diamond Club wants to expand its facility. The expansion will require $400,000 in building improvements that will be depreciated on a straight-line basis over a 20-year period. The expanded area is expected to generate $200,000 in additional sales. Variable costs are 30 percent of sales and the annual fixed costs are $10,000. The tax rate is 21 percent. What is the operating cash flow for the first year of this project?
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a. $106,900
b. $133,100
c. $110,000
d. $129,400
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