Hii expert please provide answer general accounting question A new project will increase your company's annual revenues by $80,000and increase operating expenses by $52,000. The project requires initialequipment costing $45,000, which will be depreciated using straight-line depreciation to zero over the 5-year life of the project. Thecompany's tax rate is 25%. What is the annual operating cash flow ofthe project using the tax shield approach?

Step 1: Define Operating Cash Flow (OCF) Using the Tax Shield ApproachThe Operating Cash Flow (OCF)…

Answered: A new project will increase your…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
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a project will increase sales by $92,800 and cash expenses by $53,200. The project will cost $89,000 and be depreciated using straight-line depreciation to a book value of zero over the 4-year life of the project. The tax rate is 35 percent. what is the operating cash flow (OCF) of the project using the tax shield approach? A) $35,170.50 B)$28,650.00 C)$42,350.50 D)$37,672.50 E)$33,527.50
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