Concord Corporation is evaluating a project that will increase sales by $405,000 and costs by $238,000. The project will initially cost $1,218,000 for fixed assets that will be depreciated straight-line to a zero book value over the 10-year life of the project. The applicable tax rate is 25 percent. What is the operating cash flow for this project?
$155,700 |
||
$146,100 |
||
$138,800 |
||
$129,400 |
||
$118,800 |
A. $155,700
Tax = 0.25 × [$405,000 - $238,000 - ($1,218,000 / 10)] = $11,300
OCF = $405,000 - $238,000 - $11,300 = $155,700
Concord Corporation is evaluating a project that will increase sales by $405,000 and costs by $238,000....
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