Depreciated straight-line to zero over three-year tax life
Course:- Financial Management
Reference No.:- EM13882244

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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.97 million. 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 $2,170,000 in annual sales, with costs of $865,000. If the tax rate is 35 percent, what is the OCF for this project?

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