Ernie's Electrical Is Evaluating a Project That Will Increase Sales

question 24

Multiple Choice

Ernie's Electrical is evaluating a project that will increase sales by $39,000 and costs by $6,000.The project will initially cost $102,000 for fixed assets that will be depreciated straight-line to a zero book value over the 10-year life of the project.The applicable tax rate is 35 percent.What is the operating cash flow for this project?

• A)$13,300
• B)$21,450
• C)$25,020
• D)$11,550
• E)$18,180

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