Question: Ernie's Electrical is evaluating a project which will increase annual sales by $20,000 and annual cash operating costs by $15,000. The project will cost $150,000

Ernie's Electrical is evaluating a project which will increase annual sales by $20,000 and annual cash operating costs by $15,000. The project will cost $150,000 and will be depreciated straight-line to a zero book value over the 20 year life of the project. The applicable tax rate is 30%. What is the operating cash flow for this project?

a) $3,500

b) $1,500

c) $5,750

d) $2,250

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