Question 6

Phone Home, Inc. is considering a new 6-year expansion project that requires an initial fixed asset investment of $5,994,000. The fixed asset will be depreciated straight-line to zero over its 6-year tax life, after which time it will be worthless. The project is estimated to generate $5,328,000 in annual sales, with costs of $2,131,200. The tax rate is 16 percent. What is the operating cash flow for this project?

		$1,894,318
		$2,515,482
		$2,669,328
		$2,845,152