Q1) Jefferson & Sons is evaluating a project that will increase annual sales by $138,000 and annual costs by $94,000. The project will initially require $110,000 in fixed assets that will be depreciated straight line to a zero book value over the 4 year life of the project. The applicable tax rate is 32%. What is the operating cash flow for this project?
a. $11,220
b. $29,920
c. $38,720
d. $46,480
e. $48,620
Q2) Your company has invested millions of dollars for a new product, and you're almost 60% complete through the development process. Is there any reason you would cancel this project?