A company is considering a new 6-year project that will have annual sales of $198,000 and costs of $122,000. The project will require fixed assets of $241,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 34 percent. What is the operating cash flow for Year 2?
Multiple Choice
$65,892
$63,817
$76,381
$52,061
$59,599
Year1 | 2 | 3 | 4 | 5 | 6 | |
Sales | 198000 | 198000 | 198000 | 198000 | 198000 | 198000 |
Cost | 122000 | 122000 | 122000 | 122000 | 122000 | 122000 |
Depreciation | 48200 | 77120 | 46272 | 27763.2 | 27763.2 | 13881.6 |
EBIT | 27800 | -1120 | 29728 | 48236.8 | 48236.8 | 62118.4 |
Tax on EBIT@34% | 9452 | -380.8 | 10107.52 | 16400.51 | 16400.51 | 21120.26 |
NOPAT | 18348 | -739.2 | 19620.48 | 31836.29 | 31836.29 | 40998.14 |
Depreciation | 48200 | 77120 | 46272 | 27763.2 | 27763.2 | 13881.6 |
cash flow | 66548 | 76380.8 | 65892.48 | 59599.49 | 59599.49 | 54879.74 |
Depreciation caluclation | ||||||
241000 cost | 20% | 32% | 19.20% | 11.52% | 11.52% | 5.76% |
Depreciation caluclation | 48200 | 77120 | 46272 | 27763.2 | 27763.2 | 13881.6 |
Option c is correct 76381 |
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