Question: What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $306,000 must be spent

What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $306,000 must be spent on new equipment. The equipment has an expected life of 7 years and will be depreciated straight-line over that same period to a book value of 0. New annual sales of $206,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 41% of sales. Tax rate is 30%. In the event EBIT is negative, the firm would have a tax credit based on the 30% tax rate. Fixed cash operating expenses are $47,000 per year. Interest expense is expected to be $21,000 each year. Salvage value of the equipment at the end of its life is expected to $62,000. (Round your answer to the nearest penny and enter with a decimal point (a period).)
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