A replacement project will annually generate additional revenues of $800,000. It has fixed and variable costs totaling $500,000. It will increase depreciation costs by $220,000. The firm has a marginal tax rate of 34%. What is the projection for the firm's operating cash flow for this replacement project? A. $272,800 B. $8,000 C. $27,200 D. $52,800
A replacement project will annually generate additional revenues of $800,000. It has fixed and variable costs totaling $500,000. It will increase depreciation costs by $220,000. The firm has a marginal tax rate of 34%. What is the projection for the firm's operating cash flow for this replacement project? A. $272,800 B. $8,000 C. $27,200 D. $52,800
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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
Transcribed Image Text:A replacement project will annually generate additional revenues
of $800,000. It has fixed and variable costs totaling $500,000. It will
increase depreciation costs by $220,000. The firm has a marginal
tax rate of 34%. What is the projection for the firm's operating cash
flow for this replacement project?
A. $272,800
B. $8,000
C. $27,200
D. $52,800
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