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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Please need help with this accounting question
A proposed expansion project is expected to increase sales by $89,000 and increase cash expenses by $44,000. The project will require $60,000 of fixed assets that will be depreciated using straight-line depreciation to a zero book value over the five-year life of the project. The store has a marginal tax rate of 30 percent. What is the operating cash flow of the project using the tax shield approach? Ignore bonus depreciation.

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