ZuoTi.Pro
Question

Jansen Company, Inc. is contemplating a new 4 – year expansion project that requires an initial...

Jansen Company, Inc. is contemplating a new 4 – year expansion project that requires an initial fixed asset investment of $3.6 million and initial working capital investment of $300,000. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it is expected to be sold for $200,000 cash. The project is estimated to generate $3,050,000 in annual sales, with costs of $1,992,000. If the tax rate is 35%, what is the Operating Cash Flow (OCF) for this project for each of the 4 years?

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Calculate operating cash flow :

Annual Sales 3050000
Cost -1992000
Depreciation (3600000-200000/4) -850000
Income before tax 208000
Tax -72800
Net income 135200
Add: Depreciation 850000
Operating cash flow 985200

Operating cash flow for this project for each of 4 years = $985200

0 0
Add a comment
Know the answer?
Add Answer to:
Jansen Company, Inc. is contemplating a new 4 – year expansion project that requires an initial...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...

    H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $3,050,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $3,310,000 in annual sales, with costs of $2,330,000. If the tax rate is 23 percent, what is the OCF for this project?

  • Summer Tyme, inc., is considering a new three year expansion project that requires an initial fixed...

    Summer Tyme, inc., is considering a new three year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed asset will be depreciated straight line to zero over the life of the project, after which time it will be worthless. The project is estimated to generate $2650000 in annual sales, with costs of $840000 and a tax rate of 35 percent. The required return on the project is 12 percent. a) What is the operating cash...

  • Cochrane. Inc, is considering a new three-year expansion project that requires an initial fixed asset investment...

    Cochrane. Inc, is considering a new three-year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2.150.000 in annual sales. with costs of $1.311.236. Required: If the tax rate is 35 percent, what is the OCF for this project? (Do not include the dollar sign ($). Enter your answer in...

  • Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment...

    Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,150,000 in annual sales, with costs of $1,078,327. Required: If the tax rate is 35 percent, what is the OCF for this project? (Do not include the dollar sign ($). Enter your answer in...

  • Cochrane. Inc., is considering a new three-year expansion project that requires an initial fixed asset investment...

    Cochrane. Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.1 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2.150.000 in annual sales, with costs of $1.311.236. Required: If the tax rate is 35 percent, what is the OCF for this project? (Do not include the dollar sign ($). Enter your answer in...

  • H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...

    H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.15 million. The fixed asset will be depreciated straight- line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2.23 million in annual sales, with costs of $1.25 million. If the tax rate is 23 percent, what is the OCF for this project? (Do not round intermediate calculations and round your...

  • 1) Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of...

    1) Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,370,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,240,000 in annual sales, with costs of $1,230,000. Required: If the tax rate is 35 percent, what is the OCF for this project? (Do not round intermediate calculations. Enter your answer in dollars, not...

  • Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset...

    Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.698 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless. The project is estimated to generate $4,176,000 in annual sales, with costs of $1,670,400. Required: If the tax rate is 35 percent, what is the OCF for this project? rev: 09_18_2012 $2,176,740 $610,740 $2,505,600 $2,067,903 $2,285,577 Dog Up! Franks...

  • Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset...

    Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $3.6 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,620,000 in annual sales, with costs of $829,000. If the tax rate is 35%, what is the OCF for...

  • H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...

    H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,550,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,300,000 in annual sales, with costs of $1,290,000. The project requires an initial investment in net working capital of $165,000, and the fixed asset will have a market value of $190,000 at the end of the project. Assume that the tax...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
Active Questions
ADVERTISEMENT