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Laurel's Lawn Care, Ltd

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Laurel's Lawn Care, Ltd., has a new mower line that can generate revenues of $120,000 per year. Direct production costs are $40,000 and the fixed costs of maintaining the lawn mower factory are $15,000 a year. The factory originally cost $1 million and is included in an asset class with a CCA rate of 5%. Calculate the operating cash flows of the project for the next 6 years if the firm's tax bracket is 35%. CCA (5%) End of Year Year (Depreciation) UCC 1 $1,000,000 $25,000 $975,000 UCC 2 48,750 926,250 975,000 926,250 3 46,313 879,937 879,937 43.997 835,940 5 835,940 41.797 794.143 794,143 39,707 754,436