A Project Will Increase Sales by $60,000 and Cash Expenses

question 64

Multiple Choice

A project will increase sales by $60,000 and cash expenses by $51,000. The project will cost $40,000 and will be depreciated using straight-line depreciation to a zero book value over the 4-year life of the project. The company has a marginal tax rate of 35%. What is the operating cash flow of the project using the tax shield approach?

• A) $5,850
• B) $8,650
• C) $9,350
• D) $9,700
• E) $10,350

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The process by which gas changes into a liquid when it cools.

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Water that is generated or obtained as a result of a process, such as the by-product of industrial processes or biochemical reactions.

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Rigid layers surrounding plant cells, composed mainly of cellulose, hemicellulose, and lignin, providing structure and protection.

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Materials used in the construction of buildings, bridges, or other structures, providing support and stability.