Expansion project-requires initial fixed asset investment

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Reference no: EM131893458

Summer Tyme, Inc., is considering a new 4-year expansion project that requires an initial fixed asset investment of $5.724 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will be worthless. The project is estimated to generate $5,088,000 in annual sales, with costs of $2,035,200.

Required:

If the tax rate is 32 percent, what is the OCF for this project.

Reference no: EM131893458

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