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ABC Inc. is evaluating a project that will increase annual sales by 230,000 and annual case costs by 88,000. the project will initially require 145,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life od the project. The applicable tax rate is 35 percent.

a. What is the operating cash flow for this project?

b. ABC In. has determined that it requires 35,000 in NWC, has a required return rate of 14%, and requires all projects to payback within 4 years. What is the payback period?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92781520

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