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Operating cash flow for JL Ticker's Store

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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?

a. $5,600
b. $7,800
c. $11,600
d. $13,300
e. $14,600

© BrainMass Inc. brainmass.com October 15, 2018, 9:22 am ad1c9bdddf - https://brainmass.com/business/discounted-cash-flows-model/operating-cash-flow-jl-tickers-store-335965

Solution Summary

The solution explains how to calculate the operating cash flow of the project using the tax shield approach.

$2.19