A proposed expansion project is expected to increase sales of JL Ticker's Store by $35,000 and increase cash expenses by $21,000. The project will cost $24,000 and be depreciated using straight line depreciation to a zero book value over the 4 yr life of the project. The store has a marginal tax rate of 30%. What is the operating cash flow of the project using the tax shield approach?
The solution explains how to calculate the operating cash flow of the project using the tax shield approach.