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    Ernie's Electrical's Operating Cash Flow

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    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 be depreciated straight-line to a zero book value over the 10 year life of the project. The applicable tax rate is 34 percent. What is the operating cash flow for this project?

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    Solution Preview

    Depreciation expense = 150,000/10 years = 15,000 per year

    Sales increase 50,000
    Less costs ...

    Solution Summary

    This solution is comprised of a list of figures necessary to compute the operating cash flow for Ernie's Electrical.