Question

Emma's Cabinets 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 annual sales of $110,000 with associated costs (other than depreciation) of $70,000. Kurt’s pay $5,000 a year as interest on its debt. 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 35%. What is the annual operating cash flow for this project?

Answer 1

33,000