Kurt's Kabinets Is Looking at a Project That Will Require

question 71

Multiple Choice

Kurt's Kabinets is looking at a project that will require $80,000 in fixed assets and another $20,000 in net working capital.The project is expected to produce sales of $138,000 with associated costs of $74,000.The project has a 4-year life.The company uses straight-line depreciation to a zero book value over the life of the project.The tax rate is 34 percent.What is the operating cash flow for this project?

• A)$42,240
• B)$62,240
• C)$35,440
• D)$49,040
• E)$69,040

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Definitions:

Principal Debtor

The main individual or entity legally obligated to repay a debt or loan in accordance with the terms of the agreement.

Guarantor

An individual or entity that agrees to be responsible for another's debt or performance under a contract if the original party fails to meet their obligations.

Obligor

A person who is bound by a promise or other obligation; a promisor.

Statute of Frauds

A legal doctrine requiring certain contracts to be documented in writing and officially signed, aimed at preventing fraudulent claims and enforcing agreements.