Requires initial fixed asset investment

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Reference no: EM131950215

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.134 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless. The project is estimated to generate $1,008,000 in annual sales, with costs of $403,200.

Required:

If the tax rate is 35 percent, what is the OCF for this project?

Reference no: EM131950215

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