None Sandy Inc., is considering a new three-year expansionproject that requires an initial fixed asset investment of$2.7 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time itwill be worthless. The project is estimated to generate$2,080,000 in annual sales, with costs of $500,000.If the tax rate is 35 percent, what is the OCF for the project?a. $900,675b. $1,021,550c. $1,189,000d. $1,210,800e. $1,342,000

The problem requires the determination of the OCF. OCF or Operating cash flow pertains to the cash…

Answered: Sandy Inc., is considering a new…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 8P: The Rodriguez Company is considering an average-risk investment in a mineral water spring project...

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