Sam's Sports Bar wants to expand their facility. The expansion will require $330,000 in building improvements, which will be depreciated on a straight-line basis over a 20-year period. The expanded area is expected to generate $120,000 in additional sales of which 60 percent is variable cost. The fixed costs are $10,000 annually and the tax rate is 35 percent. What is the operating cash flow for the first year of this project? a.

$40,200 b.

$36,895 c.

$30,475 d.

$24,700 e.

$27,025

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