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Quad Enterprises is considering a new 4-year expansion project that requires an initial fixed asset investment...

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Finance

Quad Enterprises is considering a new 4-year expansion projectthat requires an initial fixed asset investment of $3.834 million.The fixed asset will be depreciated straight-line to zero over its4-year tax life, after which time it will be worthless. The projectis estimated to generate $3,408,000 in annual sales, with costs of$1,363,200. If the tax rate is 22 percent, what is the OCF for thisproject?

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Solution The Operating Cash Flow each Year for the    See Answer
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Transcribed Image Text

Quad Enterprises is considering a new 4-year expansion projectthat requires an initial fixed asset investment of $3.834 million.The fixed asset will be depreciated straight-line to zero over its4-year tax life, after which time it will be worthless. The projectis estimated to generate $3,408,000 in annual sales, with costs of$1,363,200. If the tax rate is 22 percent, what is the OCF for thisproject?

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