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Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset...

Hubrey Home Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset falls into Class 10 for tax purposes (CCA rate of 30% per year), and at the end of the three years can be sold for a salvage value equal to its UCC. The project is estimated to generate $2,560,000 in annual sales, with costs of $811,000. If the tax rate is 35%, what is the OCF for each year of this project?

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OCF2

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Expert Solution

Salvage value by selling the assets goes in the Investing cash flow. Operating cash flow is generated by the firm's regular business activities.

jeff jeffy answered 6 months ago
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