The equipment cost (equipment plus shipping and installation) can be depreciated at the rate of 44% the first year. The remaining 5 years (years 2-6) the depreciation will be equal to $30,000 per year. Amount of depreciation is $198,000 in year 1.

-Based on some market research you expect to sell around 200,000 bottles of V-Drink a year at wholesale price of $2. Operating costs (excluding depreciation) are expected to be 50% of revenue. The firms tax rate is 40%. What is the annual operating cash flow associated with this project in year 2. (Note you will need to factor in $30,000 in depreciation in year 2 from the prior question).