ercent, what is the aftettax Sal vagl tl Calculating Project OCF ILO1] Quad Ente

Question

ercent, what is the aftettax Sal vagl tl Calculating Project OCF ILO1] Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 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 $2,190.000 in annual sales, with costs of $815,000. If the tax rate is 35 percent, what is the OCF for this project? 9. RY 11 In the previous problem, suppose the required

Explanation / Answer

Initial Investment=2900000
Revenues=2190000
Costs=815000
Depreciation=2900000/3
After-tax OCF=(2190000-815000-2900000/3)*(1-35%)+2900000/3=1232083.333

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