Question

Quad Enterprises is considering a new 4-year expansion project that requires an initial fixed asset investment of $2.646 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthless. The project is estimated to generate $2,352,000 in annual sales, with costs of $940,800. If the tax rate is 25 percent, what is the OCF for this project? A. $1,162,586 B. $562,275 C. $1,223,775 D. $1,411,200 E. $1,284,964

Name: quad enterprises is considering a new 4 year expansion project that requires an initial fixed asset investment of 2646 million the fixed asset will be depreciated straight line to zero over 41246
Uploaded: 2022-06-17T17:44:21-08:00
Duration: 3 min 10 s
Channel: Shaiju T
Description: quad enterprises is considering a new 4 year expansion project that requires an initial fixed asset investment of 2646 million the fixed asset will be depreciated straight line to zero over 41246

          Quad Enterprises is considering a new 4-year expansion project
that requires an initial fixed asset investment of $2.646 million.
The fixed asset will be depreciated straight-line to zero over its
4-year tax life, after which time it will be worthless. The project
is estimated to generate $2,352,000 in annual sales, with costs of
$940,800.
  
If the tax rate is 25 percent, what is the OCF for this
project?
A. $1,162,586
B. $562,275
C. $1,223,775
D. $1,411,200
E. $1,284,964

Added by Stacy C.

Calculus: Early Transcendentals

James Stewart 8th Edition

Instant Answer

Solved by Expert Shaiju T

06/17/2022

Step 1

Given initial fixed asset investment = $2,646,000 Life of the project = 4 years Annual depreciation = Initial investment / Life of project Annual depreciation = $2,646,000 / 4 Annual depreciation = $661,500 Show more…

Show all steps

Thanks for your feedback!

Quad Enterprises is considering a new 4-year expansion project that requires an initial fixed asset investment of $2.646 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthless. The project is estimated to generate $2,352,000 in annual sales, with costs of $940,800. If the tax rate is 25 percent, what is the OCF for this project? A. $1,162,586 B. $562,275 C. $1,223,775 D. $1,411,200 E. $1,284,964