What is the project after-tax operating cash flows

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Reference no: EM132069086

1. A new capital budgeting project is being considered. The project will reduce current manufacturing expenses by $5,000 annually and increase earnings (revenue) before depreciation and taxes by $6,000 annually. The project will generate $8,000 per year in depreciation of the required equipment. The firm's marginal tax rate is 40 percent. What is the project's after-tax operating cash flows (OCF)?

11,000

3,000

6,600

14,600

9,800

insufficient information to compute OCF (Operating Cash Flows)

What is the overall expected return for Sherman's Inc.?

Probability of the state: Bad (.2) Average (.5) Good (.3)

Expected return in the state: Bad (-5%) Average (15%) Good (25%)

11.7%

14.0

16.0

Reference no: EM132069086

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