Problem:
Ernie's Electrical is evaluating a project that will increase sales by $39,000 and costs by $6,000. The project will initially cost $102,000 for fixed assets that will be depreciated straight-line to a zero book value over the 10-year life of the project. The applicable tax rate is 35 percent.
Required:
Question: What is the operating cash flow for this project?
- $13,300
- $21,450
- $25,020
- $11,550
- $18,180
Note: Show all workings.