Question
What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $334,000 must be spent
What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $334,000 must be spent on new equipment. The equipment has an expected life of 8 years and will be depreciated straight-line over that same period to a book value of 0. New annual sales of $220,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 43% of sales. Fixed cash operating expenses are $51,000 per year. Tax rate is 27%. In the event EBIT is negative, the firm would have a tax credit based on the 27% tax rate.
a.
72798.80
b.
76733.86
c.
65167.00
d.
81980.62
e.
80013.09
f.
65584.50
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