A Proposed Expansion Project Is Expected to Increase Sales of JL

Multiple Choice

A proposed expansion project is expected to increase sales of JL Ticker's Store by $41,000 and increase cash expenses by $21,000.The project will cost $28,000 and be depreciated using straight-line depreciation to a zero book value over the 4-year life of the project.The store has a marginal tax rate of 30 percent.What is the operating cash flow of the project using the tax shield approach?

A) $5,600
B) $7,800
C) $16,100
D) $13,300
E) $14,600