Question

A proposed new project has projected sales of $190,400, costs of $96,320, and depreciation of $6,720....

A proposed new project has projected sales of $190,400, costs of $96,320, and depreciation of $6,720. The tax rate is 30 percent. Calculate operating cash flow using the four different approaches. Requirement 1: The common calculation Approach (Do not round your intermediate calculations): Requirement 2: The Bottom-Up Approach (Do not round your intermediate calculations): Requirement 3: The Top-Down Approach (Do not round your intermediate calculations): Requirement 4: The Tax-Shield Approach (Do not round your intermediate calculations):

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Sales 190400
Costs 96320
Depreciation 6720
EBIT 87360
Tax at 30% 26208
NOPAT 61152
1) OCF = EBIT + Depreciation - Taxes
= 87360+6720-26208 = 67872
2) Bottom Up Approach: OCF = Net Income + Depreciation
= 61152+6720 = 67872
3) Top Down Approach: OCF = Sales - Costs - Taxes
= 190400-96320-26208 = 67872
4)

Tax Shield Approach: OCF = (Sales - Costs) X (1-t) + (Depreciation x t)
=(190400-96320)*(1-0.30)+6720*0.30= 67872
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A proposed new project has projected sales of $202,300, costs of $102,340, and depreciation of $7,140....
A proposed new project has projected sales of $202,300, costs of $102,340, and depreciation of $7,140. The tax rate is 32 percent. Calculate operating cash flow using the four different approaches. Requirement 1: The common calculation Approach (Do not round your intermediate calculations): Requirement 2: The Bottom-Up Approach (Do not round your intermediate calculations): Requirement 3: The Top-Down Approach (Do not round your intermediate calculations): Requirement 4: The Tax-Shield Approach (Do not round your intermediate calculations):
A proposed new project has projected sales of $213,000, costs of $95,000, and depreciation of $25,800....
A proposed new project has projected sales of $213,000, costs of $95,000, and depreciation of $25,800. The tax rate is 21 percent. Calculate operating cash flow using the four different approaches. (Do not round intermediate calculations.) Operating cash flow EBIT + Depreciation - Taxes Top-down Tax-shield Bottom-up
A proposed new investment has projected sales of $950,000. Variable costs represent 60% of sales, and...
A proposed new investment has projected sales of $950,000. Variable costs represent 60% of sales, and fixed costs are $210,000; depreciation is $102,000. What is the projected operating cash flow assuming a tax rate of 35%.                                          Sales                                                        $687,500                                     Operating Costs                                         343,860                                     Depreciation                                              110,000 What is Net Operating Profit, Taxes at 35%, Net Profit, and Operating Cash Flow
A project has projected sales of $69,000, costs of $51,500, depreciation expense of $6,900, and a...
A project has projected sales of $69,000, costs of $51,500, depreciation expense of $6,900, and a tax rate of 34 percent. What is the operating cash flow for this project?
A proposed project has fixed costs of $78,000 per year. The operating cash flow at 4,500...
A proposed project has fixed costs of $78,000 per year. The operating cash flow at 4,500 units is $95,600. Ignoring the effect of taxes, what is the degree of operating leverage? (Do not round intermediate calculations. Round your answer to 4 decimal places, e.g., 32.1616.) Degree of operating leverage If units sold rise from 4,500 to 5,000, what will be the new operating cash flow? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Operating...
Hammett, Inc., has sales of $34,630, costs of $10,340, depreciation expense of $2,520, and interest expense...
Hammett, Inc., has sales of $34,630, costs of $10,340, depreciation expense of $2,520, and interest expense of $1,750. If the tax rate is 35 percent. (Enter your answer as directed, but do not round intermediate calculations.) Required: What is the operating cash flow? (Round your answer to the nearest whole number, e.g. 32.)   Operating cash flow   $   
We are evaluating a project that costs $1,860,000, has a 6-year life, and has no salvage...
We are evaluating a project that costs $1,860,000, has a 6-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 89,300 units per year. Price per unit is $38.31, variable cost per unit is $23.50, and fixed costs are $833,000 per year. The tax rate is 21 percent, and we require a return of 9 percent on this project. a. Calculate the base-case operating cash flow...
We are evaluating a project that costs $844,200, has a nine-year life, and has no salvage...
We are evaluating a project that costs $844,200, has a nine-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 80,000 units per year. Price per unit is $54, variable cost per unit is $38, and fixed costs are $760,000 per year. The tax rate is 23 percent, and we require a return of 10 percent on this project.     a-1. Calculate the accounting break-even point....
NC is trying to estimate the first-year operating cash flow for a proposed project. The financial...
NC is trying to estimate the first-year operating cash flow for a proposed project. The financial staff has collected the following information: Proposed sales $10 million Operating costs (not including depreciation) $7 million Depreciation tax shield $0.2 million Interest expense $1.5 million The corporate tax rate is 40%. What is the project’s operating cash flow for the first year (t = 1)? Select one: a. $2,000,000 b. $1,880,000 c. $1,100,000 d. Neither of the above
Pompeii, Inc., has sales of $50,000, costs of $23,000, depreciation expense of $2,250, and interest expense...
Pompeii, Inc., has sales of $50,000, costs of $23,000, depreciation expense of $2,250, and interest expense of $2,000. If the tax rate is 23 percent, what is the operating cash flow, or OCF? (Do not round intermediate calculations.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT