Magellen Industries Is Analyzing a New Project

Multiple Choice

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the operating cash flow under the base-case scenario?

A) -$34,351
B) -$11,665
C) $0
D) $22,476
E) $30,000