Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $4.7 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,730,000 in annual sales, with costs of $864,000. If the tax rate is 35%, what is the OCF for each year of this project? (Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) OCF1 OCF2 OCF3
Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $4.7 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,730,000 in annual sales, with costs of $864,000. If the tax rate is 35%, what is the OCF for each year of this project? (Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) OCF1 OCF2 OCF3
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 17P
Related questions
Question
![Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $4.7 million. The
fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage
value equal to its UCC. The project is estimated to generate $2,730,000 in annual sales, with costs of $864,000. If the tax rate is 35%,
what is the OCF for each year of this project? (Enter the answers in dollars. Do not round your intermediate calculations. Round the
final answers to 2 decimal places. Omit $ sign in your response.)
OCF1
OCF2
OCF 3
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fde349bca-b77a-4b17-8696-f46e35f9089a%2F7047fdf6-9526-4b4e-a77f-62fac77d292d%2Fbvs3si_processed.png&w=3840&q=75)
Transcribed Image Text:Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $4.7 million. The
fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage
value equal to its UCC. The project is estimated to generate $2,730,000 in annual sales, with costs of $864,000. If the tax rate is 35%,
what is the OCF for each year of this project? (Enter the answers in dollars. Do not round your intermediate calculations. Round the
final answers to 2 decimal places. Omit $ sign in your response.)
OCF1
OCF2
OCF 3
$
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