Don't use ai given answer accounting questions PowerTech is evaluating a project which will increase sales by $45,000. Theproject will cost $200,000 and will be depreciated straight-line to a zero bookvalue over the 8-year life of the project. The applicable tax rate is 30%. Whatis the operating cash flow for this project?A. $39,000B. $41,500C. $31,500D. $28,500

Step 1: Definition of Operating Cash Flow (OCF)Operating Cash Flow (OCF) represents the cash…

Answered: PowerTech is evaluating a project which…

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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Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be 800,000 per year. The system costs 4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Sterling Wetzel has just invested 270,000 in a restaurant specializing in German food. He expects to receive 43,470 per year for the next eight years. His cost of capital is 5.5 percent. Compute the internal rate of return. Did Sterling make a good decision?
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