Question
What is the operating cash flow (OCF) for year 2 of the health club project that Silver Sun Recycling should use in its NPV analysis
What is the operating cash flow (OCF) for year 2 of the health club project that Silver Sun Recycling should use in its NPV analysis of the project? Silver Sun Recycling operates a(n) race track. The firm is evaluating the health club project, which would involve opening a health club. During year 2, the health club project is expected to have relevant revenue of 688,700 dollars, relevant variable costs of 349,300 dollars, and relevant depreciation of 85,900 dollars. In addition, Silver Sun Recycling would have one source of fixed costs associated with the health club project. Yesterday, Silver Sun Recycling signed a deal with Blue Eagle Media to develop an advertising campaign for use in the health club project. The terms of the deal require Silver Sun Recycling to pay 35,600 dollars to Blue Eagle Blue Eagle in 2 years from today. The tax rate is 25 percent.
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