A Proposed Expansion Project Is Expected to Increase Sales by $74,300

Multiple Choice

A proposed expansion project is expected to increase sales by $74,300 and increase cash expenses by $46,900. The project will require $52,800 of fixed assets that will be depreciated using straight-line depreciation to a zero book value over the five-year life of the project. The store has a marginal tax rate of 23 percent. What is the operating cash flow of the project using the tax shield approach? Ignore bonus depreciation.

A) $11,114.40
B) $17,916.60
C) $23,526.80
D) $22,800.10
E) $14,098.20