Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

Quad Enterprises is considering a new 3 year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be

Quad Enterprises is considering a new 3 year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be depreciated straight line to zero over its 3 year tax life, after which time it will be worthless. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. If the tax rate is 21%, what is the Operating Cash Flow (OCF) for this project?

Given Data
Asset investment $2,900,000
Estimated annual sales $2,190,000
Costs $815,000
Tax rate 21.0%
Project and Asset Life 3

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Managerial Finance

Authors: Lawrence J. Gitman, Chad J. Zutter

14th Global Edition

9781292018201

Students also viewed these Finance questions