Phone Home,Inc

Multiple Choice

Phone Home,Inc.is considering a new 6-year expansion project that requires an initial fixed asset investment of $5.876 million.The fixed asset will be depreciated straight-line to zero over its 6-year tax life,after which time it will be worthless.The project is estimated to generate $5,328,000 in annual sales,with costs of $2,131,200.The tax rate is 32 percent.What is the annual operating cash flow for this project?

A) $1,894,318
B) $2,211,407
C) $2,487,211
D) $2,663,021
E) $2,848,315