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Topic: Operating cash flow(growing eachyear; MACRS) Operating cash ow (growing each year; MORE}. Mathews Mining Company is looking at a project that has the following

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Topic: Operating cash flow(growing eachyear; MACRS)

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Operating cash ow (growing each year; MORE}. Mathews Mining Company is looking at a project that has the following forecasled sales: rstyear sales are ?,000 units. and sales will grow at 15% over the next four years {a ve-year project}. The price of the product will start at 5120 per unit and will increase eaoh year at 1'55. The production costs are expected to be 50% of the current years sales price. The manufacturing equipment to aid this project will have a total cost (including installation} of $1,200,000. Itwill he depreciated using MACRS, , and has a sevenyear MACRS life classication. Fixed ocsts will be $50,000 per year. Mathews Mining has a tax rate of 35%. What is the operating cash ow for this project over tl'lese ve years? What is the operating cash flow for this project in year 1

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