Question: Ernie's Electrical is evaluating a project which will increase sales by $50,000 and costs by $30,000. The project will cost $150,000 and will be depreciated

Ernie's Electrical is evaluating a project which will increase sales by $50,000 and costs by $30,000. The project will cost $150,000 and will be depreciated straight-line to a zero book value over the 10 year life of the project. The applicable tax rate is 42%. What is the operating cash flow for year 1 for this project?

Select one:

a. $2,900

b. $17,900

c. $26,600

d. Neither of the above

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