Jefferson & Sons is evaluating a project that will increase annual sales by $145

Question

Jefferson & Sons is evaluating a project that will increase annual sales by $145,000 and annual cash costs by $94,000. The project will initially require $110,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project. The applicable tax rate is 32 percent. What is the operating cash flow for this project?

A.

$11,220

B.

$29,920

C.

$43,480

D.

$46,480

  

A.

     

$11,220

     

B.

     

$29,920

     

C.

     

$43,480

     

D.

     

$46,480

   Jefferson & Sons is evaluating a project that will increase annual sales by $145,000 and annual cash costs by $94,000. The project will initially require $110,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project. The applicable tax rate is 32 percent. What is the operating cash flow for this project?

Explanation / Answer

$29,920

$29,920

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