Question
What is the operating cash flow (OCF) for year 4 of the skateboard park project that Violet Sky Health should use in its NPV analysis
What is the operating cash flow (OCF) for year 4 of the skateboard park project that Violet Sky Health should use in its NPV analysis of the project? Violet Sky Health operates a(n) apple orchard. The firm is evaluating the skateboard park project, which would involve opening a skateboard park. During year 4, the skateboard park project is expected to have relevant revenue of 808,900 dollars, relevant variable costs of 305,000 dollars, and relevant depreciation of 95,800 dollars. In addition, Violet Sky Health would have one source of fixed costs associated with the skateboard park project. Yesterday, Violet Sky Health signed a deal with Blue Eagle Marketing to develop an advertising campaign for use in the skateboard park project. The terms of the deal require Violet Sky Health to pay 39,600 dollars to Blue Eagle Blue Eagle in 4 years from today. The tax rate is 40 percent.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started