A project will increase sales by $92,800 and cash expenses by $53,200. The project will cost $89,000 and be depreciated using straight-line depreciation to a zero book value over the 4-year life of the project. The tax rate is 35 percent. What is the operating cash flow of the project using the tax shield approach?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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ISBN:9781337514835
Author:MOYER
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Chapter9: Capital Budgeting And Cash Flow Analysis
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15 A project will increase sales by $92,800 and cash expenses by $53,200. The project will cost $89,000
and be depreciated using straight-line depreciation to a zero book value over the 4-year life of the
project. The tax rate is 35 percent. What is the operating cash flow of the project using the tax shield
approach?
Transcribed Image Text:15 A project will increase sales by $92,800 and cash expenses by $53,200. The project will cost $89,000 and be depreciated using straight-line depreciation to a zero book value over the 4-year life of the project. The tax rate is 35 percent. What is the operating cash flow of the project using the tax shield approach?
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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