Answered step by step
Verified Expert Solution
Question
1 Approved Answer
operating cash flow H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.15 million. The fixed
operating cash flow
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.15 million. The fixed asset will be depreciated straight- line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2.23 million in annual sales, with costs of $1.25 million. If the tax rate is 23 percent, what is the OCF for this project? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) OCF S Asset Cost 2,150,000 Salvage cost 3. Projected life 3YR of- 0 Annulates 2,230,000 1,250,000 23% Anmul Cost tax rate Sales 2,230,000 Cost 1,250,000 depreciation expune 716,666. Taxable income 263,333," Tax expense (23%) 60,566 Net Income 1,069, 01600 add back deprecaution 716,666!? Joperating cash flow 9 19,433,33 . = asset cost 2150,000 -1 = 12230,000 1,250,000 Salvage cos+ 3 years 716,68047 Taxable income Tax expense 202, 766.46 + depreciasen OCF Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started