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(Estimated time allowance: 11 minutes) The CEO of 3 Rios Corp. is considering undertaking a project that has estimated sales of $60 million a year.
(Estimated time allowance: 11 minutes) The CEO of 3 Rios Corp. is considering undertaking a project that has estimated sales of $60 million a year. The variable production costs are 70% of sales. Cash fixed costs are $5.1 million a year. The project lasts 10 years. The equipment needed for the project costs $41 million and will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 25%. Year 1 2 3 4 5 6 7 8 9 10 11 12 3-Year 5-Year 7-Year 10-Year 33.33%20.00% 14.29%10.00% 44.45%32.00% 24.49%18.00% 14.81% 19.20% 17.49%14.40% 7.41% 11.52% 12.49% 11.52% 11.52%8.93% 9.22% 5.76% 8.93% 7.37% 8.93% 6.55% 4.45% 6.55% 6.56% 6.55% 3.28% What is operating cash flow (in millions) for year 6? Show your answer to the nearest 2 decimals. Do not use the $ sign in your answer. For example, if the answer is $6.837 million enter your answer as 6.84 Do not enter it as $6.837. $6.8. 6.8.6.837. or 6,837,000
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