(3 pts) An expansion project requires $500,000 of upfront capital costs to purch

Question

(3 pts) An expansion project requires $500,000 of upfront capital costs to purchase and install new machinery. The machinery will be depreciated straight-line to zero over a 5 year life. The New project is expected to increase sales by $320,000 per year for the next five years. Variable costs are expected to be $160,000 per year and fixed costs are expected to be $70,000 per year. The appropriate tax rate is 35%. What is the amount of the change in the firm's operating cash flow per year resulting from this project? 3) OCF = $ .

Explanation / Answer

Operating cash flows per year = (320000-160000-70000)*(1-0.35)= 58500

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.