Straight-line to zero over its three-year tax life

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Reference no: EM13923813

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,430,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,260,000 in annual sales, with costs of $1,250,000

If the tax rate is 40 percent, what is the OCF for this project?

Reference no: EM13923813

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