You are analyzing the Operating cash flow for a proposed project. The equipment

Question

You are analyzing the Operating cash flow for a proposed project. The equipment has a depreciable life of 6 years, the proposed life is 8 years. All revenue and operating expenses will remain constant. One analyst says the OCF will remain constant over the 8 year proposed life. You opinion is ______ because_____. A) yes; the revenue and operating expenses are the same. B) maybe; cash expenses should be collected for year 7 and 8 changing the OCF C) no; OCF will change the last two years because of reduced non-cash expenses.

Explanation / Answer

B) maybe; cash expenses should be collected for year 7 and 8 changing the OCF

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