Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2,098,350. 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 $1,814,883 in annual sales, with costs of $1,675,390. If the tax rate is 0.33 , what is the OCF for this project?
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2,098,350. 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 $1,814,883 in annual sales, with costs of $1,675,390. If the tax rate is 0.33 , what is the OCF for this project?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 6P
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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2,098,350. 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 $1,814,883 in annual sales, with costs of $1,675,390. If the tax rate is 0.33 , what is the OCF for this project?
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