Question
What is the operating cash flow (OCF) for year 4 of the skateboard park project that White Mountain Entertainment should use in its NPV analysis
What is the operating cash flow (OCF) for year 4 of the skateboard park project that White Mountain Entertainment should use in its NPV analysis of the project? White Mountain Entertainment operates a(n) ropes course. 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 903,700 dollars, relevant variable costs of 270,800 dollars, and relevant depreciation of 58,500 dollars. In addition, White Mountain Entertainment would have one source of fixed costs associated with the skateboard park project. Yesterday, White Mountain Entertainment signed a deal with Orange Valley Media to develop an advertising campaign for use in the skateboard park project. The terms of the deal require White Mountain Entertainment to pay 44,300 dollars to Orange Valley Orange Valley in 4 years from today. The tax rate is 35 percent.
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