Question: The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $273,000 and cash expenses by $134,000. The

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $273,000 and cash expenses by $134,000. The initial investment will require $120,000 in fixed assets that will be depreciated using the 5-year MACRS. The company has a marginal tax rate of 35 percent. What is the project OCF in year 2? Please show your work so I can see how you got the solution.

MACRS 5-year property

Year Rate

1 20.00%

2 32.00%

3 19.20%

4 11.52%

5 11.52%

6 5.76%

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!

60 6. The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $352,000 and expenses by $244,000. The project will require $153,000 in fixed assets that...

cash thews he eiedet in 1 percent, what is the project's NPV 8327 11.2208 822780.00 25 Christina invested $3,000 five years ago and earns 2 percent annual interest. By leaving 27) her interest...

2n Christina invested $3,000 five years ago and earns 2 percent annual interest. By leaving 27) her interest earnings in her account, she increases the amount of interest she earns each year. The way...

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $367,000 and expenses by $256,000. The project will require $165,000 in fixed assets that will be...

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $327,000 and expenses by $224,000. The project will require $133,000 in fixed assets that will be...

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $322,000 and expenses by $220,000. The project will require $129,000 in fixed assets that will be...

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $337,000 and expenses by $232,000. The project will require $141,000 in fixed assets that will be...

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $292,000 and expenses by $196,000. The project will require $105,000 in fixed assets that will be...

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $372,000 and expenses by $260,000. The project will require $169,000 in fixed assets that will be...

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $ 3 8 2 , 0 0 0 and expenses by $ 2 6 8 , 0 0 0 . The project will require $ 1 7 7 , 0 0 0 in...

A sprinter who weighs 670 N runs the first 7.0 m of a race in 1.6 s, starting from rest and accelerating uniformly. What are the sprinters? (a) Speed and (b) Kinetic energy at the end of the 1.6 s?...

Determine the total overallocation or underallocation of manufacturing overhead during the year. Actual manufacturing costs for the year totaled $1,225,000. 1. Assume that Therrien used direct labour...

3. Concurrent design teams also include the supplier's representatives.

1. The divisional structure has the opposite benefits and disadvantages of the functional structure. Select one A. True B. False 2. Departmentalization refers to the degree to which jobs within the...

2. How can the expectations we have of a person contribute to the image we have of him / her? Give some examples from your own everyday life.

9. Discuss the statement: If the actors mainly act on the basis of a view of human-ity as driven by self-interest, and incorporate this idea into their models, they may end up with their premises...

5. What does it mean when we say the evaluation comes before the presenta-tion?.