XYZ is evaluating a project that would require an initial investment of $500,000 and is...
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XYZ is evaluating a project that would require an initial investment of $500,000 and is expected to be in operation for 4 years. MACRS depreciation would be used where the depreciation rates in years 1, 2, 3, and 4 are 33.33%, 44.44%, 14.82%, and 7.41%, respectively. For each year of the project, XYZ relevant revenue associated with the project to be $76,000 and relevant costs associated with the project to be $8,000. The tax rate is 50 percent. What is X if X equals (the operating cash flow (OCF) associated with the project expected in year 3 of the project) plus (the OCF associated with the project expected in year 4 of the project)?
| $12,425 (plus or minus $100) | ||
| $262,425 (plus or minus $100) | ||
| $123,575 (plus or minus $100) | ||
| $105,050 (plus or minus $100) | ||
| None of the above is within $100 of the correct answer |
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