Jefferson & Sons Is Evaluating a Project That Will Increase

question 88

Multiple Choice

Jefferson & Sons is evaluating a project that will increase annual sales by $198,600 and annual cash costs by $94,500. The project will initially require $187,000 in fixed assets that will be depreciated straight-line to a zero book value over the four-year life of the project. No bonus depreciation will be taken. The applicable tax rate is 22 percent. What is the operating cash flow for this project?

• A) $97,851
• B) $89,920
• C) $91,483
• D) $86,480
• E) $46,620

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