Niro Corp. is considering a new four-year expansion project that requires an initial fixed asset investment of $3.2 million. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will be worthless. The project is estimated to generate $2,450,000 in annual sales, with costs of $620,000. If the tax rate is 30 percent, what is the OCF for the project?

Financial Management: Theory & Practice
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ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
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What is the OCF for the project?

Niro Corp. is considering a new four-year
expansion project that requires an initial fixed
asset investment of $3.2 million. The fixed asset
will be depreciated straight-line to zero over its
four-year tax life, after which time it will be
worthless. The project is estimated to generate
$2,450,000 in annual sales, with costs of
$620,000.
If the tax rate is 30 percent, what is the OCF for
the project?
Transcribed Image Text:Niro Corp. is considering a new four-year expansion project that requires an initial fixed asset investment of $3.2 million. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will be worthless. The project is estimated to generate $2,450,000 in annual sales, with costs of $620,000. If the tax rate is 30 percent, what is the OCF for the project?
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