Quad Enterprises is considering a new 5-year expansion project that requires an initial fixed asset investment of $2.43 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 $2,160,000 in annual sales, with costs of $864,000.

If the tax rate is 22 percent, what is the OCF for this project?

Multiple Choice

• $1,173,690

• $1,061,910

• $1,117,800

• $1,296,000

• $631,800