Chase Brew Inc is considering an investment with the following information: initial investment in assets = $1,600,000 to be depreciated to $0 via straight-line method over 8-year project life sales will increase by $1,750,000/year expenses will increase by $1,240,000/year firm's marginal tax rate is 28% What is the incremental after-tax cash flow (OCF) per year associated with the following project? Enter answer in dollars, rounded to the nearest dollar

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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Chase Brew Inc is considering an investment with the following information:

  • initial investment in assets = $1,600,000 to be depreciated to $0 via straight-line method over 8-year project life
  • sales will increase by $1,750,000/year
  • expenses will increase by $1,240,000/year
  • firm's marginal tax rate is 28%

What is the incremental after-tax cash flow (OCF) per year associated with the following project? 

Enter answer in dollars, rounded to the nearest dollar.

 
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