Use the following information for the following four questions. Your company may introduce a new line of tennis shoes. You have been given the following projections: sales = 50,000 units @ $100 per unit; variable costs = $55 per unit; fixed costs = $300,000 per year; initial investment = $4,000,000; interest expense = $125,000 per year; project life = 10 years. The corporate tax rate is 35%? You may assume straight-line depreciation and a discount rate of 10%.

What is the annual operating cash flow for this project? A) $ 926,250 B) $1,026,250 C) $1,126,250 D) $1,226,250 E) $1,451,250

. What is the value of the annual depreciation tax shield for the project? A) $120,000 B) $130,000 C) $140,000 D) $150,000 E) $400,000