Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Summer Tyme, Inc., is considering a new 5-year expansion project that requires an initial fixed asset investment of $4.536 million. The fixed asset will be

Summer Tyme, Inc., is considering a new 5-year expansion project that requires an initial fixed asset investment of $4.536 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 $4,032,000 in annual sales, with costs of $1,612,800. Required: If the tax rate is 32 percent, what is the OCF for this project?

Options:

$1,935,360

$2,032,128

$2,419,200

$1,838,592

$1,028,160

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance

Authors: Philip J. Adelman; Alan M. Marks

6th edition

9780133099096, 133140512, 133099091, 978-0133140514

More Books

Students also viewed these Finance questions