Fixed asset will be depreciated straight-line to zero

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Reference no: EM131549638

Summer Tyme, Inc., is considering a new 4-year expansion project that requires an initial fixed asset investment of $2.160 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 $1,920,000 in annual sales, with costs of $768,000.

Required:

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

Reference no: EM131549638

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