Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.214 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 $1,968,000 in annual sales, with costs of $787,200.

Required:

If the tax rate is 34 percent, what is the OCF for this project?

rev: 09_18_2012

$1,081,760

$1,030,248

$292,248

$978,736

$1,180,800