Question

Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $4.2 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,680,000 in annual sales, with costs of $849,000. If the tax rate is 35%, what is the OCF for each year of this project? (Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to 2 decimal places.)

OCF1 ?

OCF2 ?

OCF3 ?

Answer 1

Based on the given data, pls find below workings , steps on CCA and the Cash Flows from Year 0 till Terminal year;