Question: Pierre Wineries is evaluating a project that would require an initial Investment in equipment of 580,000 and that is expected to last for 6 years.

 Pierre Wineries is evaluating a project that would require an initial

Pierre Wineries is evaluating a project that would require an initial Investment in equipment of 580,000 and that is expected to last for 6 years. MACRS depreciation would be used where the depreciation rates in years 1. 2. 3. 4, and 5 are 40.09. 25.0%, 15.0%, 10.0%, and 10.0%, respectively. For each year of the project. Pierre Wineries expects relevant annual revenue associated with the project to be 543,000 and relevant annual costs associated with the project to be $30,000. The tax rate is 50 percent. What is (X plus Y) if X is the relevant operating cash flow (OCF) associated with the project expected in year 1 of the project and Y is the relevant OCF associated with the project expected in year 3 of the project? a. 516,000 (plus or minus 5100) b. 535,000 (plus or minus 5100) C. $33,000 (plus or minus 5100) d. 554,000 (plus or minus 5100) e. None of the above is within 5100 of the correct

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!