Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the operating cash flow under the base-case scenario?
A) -$34,351
B) -$11,665
C) $0
D) $22,476
E) $30,000

Question

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows:  Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the operating cash flow under the base-case scenario?
A) -$34,351 
B) -$11,665 
C) $0 
D) $22,476 
E) $30,000

Quizplus · Accepted Answer

The Answer of Magellen Industries is analyzing a new project. The data they have gathered to date is as follows:  Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the operating cash flow under the base-case scenario?
A) -$34,351 
B) -$11,665 
C) $0 
D) $22,476 
E) $30,000

Magellen Industries Is Analyzing a New Project