Jefferson & Sons is evaluating a project that will increase annual sales by $145,000 and annual cash costs by $94,000.The project will initially require $110,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project.The applicable tax rate is 32 percent.What is the operating cash flow for this project?
A)$11,220
B)$29,920
C)$43,480
D)$46,480
E)$46,620

Question

Quizplus · Accepted Answer

OCF = ($145,000 - $94,000)(1 - 0.32) + ($110,000/4)(0.32) = $43,480

Jefferson & Sons Is Evaluating a Project That Will Increase