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The Book Store is considering a new four-year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be
The Book Store is considering a new four-year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be depreciated straight-line to zero over its four-year life, after which time it will be worthless. The project is estimated to generate $1.98 million in annual sales, with costs of $0.79 million. If the tax rate is 34 percent, what is the OCF for this project?
A. $665,000 B. $525,000 C. $325,400 D. $963,900 E. $1,190,000
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