Question
XYZ is evaluating a project that would require an initial investment of $600,000 and is expected to be in operation for 4 years. MACRS depreciation
XYZ is evaluating a project that would require an initial investment of $600,000 and is expected to be in operation for 4 years. MACRS depreciation would be used where the depreciation rates in years 1, 2, 3, and 4 are 33.33%, 44.44%, 14.82%, and 7.41%, respectively. For each year of the project, XYZ expects relevant revenue associated with the project to be $96,000 and relevant costs associated with the project to be $48,000. The tax rate is 50 percent. What is X if X equals (the operating cash flow (OCF) associated with the project expected in year 3 of the project) plus (the OCF associated with the project expected in year 4 of the project)?
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