Ernie's Electrical Is Evaluating a Project Which Will Increase Annual

Multiple Choice

Ernie's Electrical is evaluating a project which will increase annual sales by $50,000 and costs by $30,000.The project has an initial asset cost of $150,000 that will be depreciated straight-line to a zero book value over the 10-year life of the project.Ignore bonus depreciation.The applicable tax rate is 25 percent.What is the annual operating cash flow for this project?

A) $19,250
B) $15,500
C) $21,350
D) $17,900
E) $18,750