Summer Tyme, Inc., is considering a new 5-year expansion project that requires an initial fixed asset investment of $3.888 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 $3,456,000 in annual sales, with costs of $1,382,400.
If the tax rate is 33 percent, what is the OCF for this project?
PLEASE SHOW ALL WORK.
(The only possible answers are: $1,728,216 or $1,645,920 or $2,073,600 or $868,320 or $1,563,624)
