Your employer is contemplating the purchase of a new machine which is forecasted to increase EBITDA by $20,000 annually for 5 years. The cost is $70,000. Installation costs are $5,000. Assume the machine will be depreciated on the tax books using the straight line method for 5 years.

Integrating the machine into the firm's existing operations will require an initial increase in net operating working capital of $1,500. Your company expects to sell the machine at the end of 5 years for $36,000. Other data:

Company's Tax Rate 50%

WACC 14%

Prime Rate 5%

T-Bill Rate 6.25%

What is the projected annual operating cash flow for this project?

A. $17,650

B. $2,500

C. $20,000

D. $17.500

E. $5,000