What is relevant operating cash flow for year one

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Reference no: EM132010357

Fairfax Paint operates stores in Virginia. The firm is evaluating the Vienna project, which would involve opening a new store in Vienna. During year 1, Fairfax Paint would have total revenue of 399,000 dollars and total costs of 268,000 dollars if it pursues the Vienna project, and the firm would have total revenue of 332,000 dollars and total costs of 242,000 if it does not pursue the Vienna project. Depreciation taken by the firm would be 71,000 dollars if the firm pursues the project and 37,000 dollars if the firm does not pursue the project. The tax rate is 45 percent. What is the relevant operating cash flow (OCF) for year 1 of the Vienna project that Fairfax Paint should use in its NPV analysis of the Vienna project?

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Reference no: EM132010357

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