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SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales. The project lasts
SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales. The project lasts 10 years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 20%.
| Year | 3-Year | 5-Year | 7-Year | 10-Year |
| 1 | 33.33% | 20.00% | 14.29% | 10.00% |
| 2 | 44.45% | 32.00% | 24.49% | 18.00% |
| 3 | 14.81% | 19.20% | 17.49% | 14.40% |
| 4 | 7.41% | 11.52% | 12.49% | 11.52% |
| 5 | 11.52% | 8.93% | 9.22% | |
| 6 | 5.76% | 8.93% | 7.37% | |
| 7 | 8.93% | 6.55% | ||
| 8 | 4.45% | 6.55% | ||
| 9 | 6.56% | |||
| 10 | 6.55% | |||
| 11 | 3.28% | |||
| 12 |
The operating cash flow for year 2 is ___________
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