Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $6.156 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 $5,472,000 in annual sales, with costs of $2,188,800.

Required:

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

Multiple Choice

• $2,864,592

• $2,721,362

• $3,007,822

• $3,283,200

• $812,592