Question
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.6 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless.
The project is estimated to generate $2185738 in annual sales, with costs of $765901. If the tax rate is 30 percent, what is the OCF for this project?