Problemsummer tyme inc is considering a new 5-year, Ask an Expert

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Problem:

Summer Tyme, Inc., is considering a new 5-year expansion project that requires an initial fixed asset investment of $1.296 million. The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which time it will be worthless. The project is estimated to generate $1,152,000 in annual sales, with costs of $460,800.

Instruction:

Question: If the tax rate is 33 percent, what is the OCF for this project?

Note: Explain in detail.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172707

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