What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $321,000 must be spent on new equipment. The equipment has an expected life of 7 years and will be depreciated straight- line over that same period to a book value of 0. New annual sales of $211,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 44% of sales, Fixed cash operating expenses are $46,000 per year. Tax rate is 20%, in the event EBIT is negative, the firm would have a tax credit based on the 26% tax rate. Oa78385.51 Ob. 65321.26 Oe. 64862.69 Od. 58135.92 Oe, 82304.78 Of. 54216.64

What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $321,000 must be spent on new equipment. The equipment has an expected life of 7 years and will be depreciated straight- line over that same period to a book value of 0. New annual sales of $211,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 44% of sales, Fixed cash operating expenses are $46,000 per year. Tax rate is 20%, in the event EBIT is negative, the firm would have a tax credit based on the 26% tax rate. Oa78385.51 Ob. 65321.26 Oe. 64862.69 Od. 58135.92 Oe, 82304.78 Of. 54216.64

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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Question

What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project,
$321,000 must be spent on new equipment. The equipment has an expected life of 7 years and will be depreciated straight-
line over that same period to a book value of 0. New annual sales of $211,000 are expected (expected sales are the same each
year). Cost of goods sold are projected to be 44% of sales, Fixed cash operating expenses are $46,000 per year. Tax rate is
26%, in the event EBIT is negative, the firm would have a tax credit based on the 26% tax rate.
O a. 78385.51
Ob. 65321.26
Oe. 64862.69
Od. 68135.92
O e. 82304.78
Of. 54216.64

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