Question

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $918,010. The fixed asset will be depreciated straight-line to 56,208 over its 3-year tax life, after which time it will have a market value of $124,620. The project requires an initial investment in net working capital of $58,280. The project is estimated to generate $237,369 in annual sales, with costs of $155,599. The tax rate is 0.21 and the required return on the project is 0.11. What is the operating cash flow in years 1 through 3? (Make sure you enter the number with the appropriate +/- sign)

Answer 1

there is no tax as there is loss, so the ocf is equal to the sales minus operting expenses