Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight- line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,657,000 in annual sales, with costs of $633,000. If the tax rate is 25 percent, what is the OCF for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) OCF
Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight- line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,657,000 in annual sales, with costs of $633,000. If the tax rate is 25 percent, what is the OCF for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) OCF
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 6P
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Question
![Esfandairi Enterprises is considering a new three-year expansion project that requires an
initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight-
line to zero over its three-year tax life, after which time it will be worthless. The project is
estimated to generate $1,657,000 in annual sales, with costs of $633,000. If the tax rate
is 25 percent, what is the OCF for this project? (Do not round intermediate calculations
and enter your answer in dollars, not millions of dollars, rounded to the nearest whole
number, e.g., 1,234,567.)
OCF](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0337a78e-fd8b-4a15-b37f-71e3c0657abd%2F9b19b20f-4176-4425-9ef4-4b678a269ee5%2Fcbisoim_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Esfandairi Enterprises is considering a new three-year expansion project that requires an
initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight-
line to zero over its three-year tax life, after which time it will be worthless. The project is
estimated to generate $1,657,000 in annual sales, with costs of $633,000. If the tax rate
is 25 percent, what is the OCF for this project? (Do not round intermediate calculations
and enter your answer in dollars, not millions of dollars, rounded to the nearest whole
number, e.g., 1,234,567.)
OCF
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