Quad Enterprises is considering a new 5-year expansion project that requires an initial fixed asset investment of $3.186 million. The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which time it will be worthless. The project is estimated to generate $2,832,000 in annual sales, with costs of $1,132,800.

If the tax rate is 24 percent, what is the OCF for this project?

Multiple Choice

• $1,516,536

• $1,699,200

• $807,120

• $1,372,104Incorrect

• $1,444,320