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What are the operating cash flows for this project

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Reference no: EM132999587

Question - Company X is considering a new 3-year project that requires an initial fixed asset investment of $1.5m. The fixed asset would be depreciated straight-line to zero over its three-year tax life after which time it will be worthless. In year 1 the project is estimated to generate $1,075,000 in annual sales with costs of $600,000. Thereafter the project's costs and sales are expected to grow at a rate of 10% per annum. If the tax rate is 20%, what are the operating cash flows for this project?

Reference no: EM132999587

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