Question

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
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Approach - 1

=EBIT+Depreciation - Taxes

=(213000-95000-25800)+25800-((213000-95000-25800)*21%)

= 92200+25800-19362

=$ 98638

Approach - 2

Top down Approach = Sales - Costs - Taxes

= 213000 - 95000 - ((213000 - 95000 - 25800)*21%)

= 118000 - 19362

=$98638

Approach - 3

Tax shied approach = (sales - costs) * (1 - tax rate) + (depreaciation* tax rate)

= (213000 - 95000) * (1 - 0.21) + (25800 * 0.21)

= 93220 + 5418

= $ 98638

Approach - 4

Bottom up approach = Net Income + Depreciation

= (213000 - 95000 - 25800 - 19362) + 25800

= $ 98638

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 $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):
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?
Pompeii, Inc., has sales of $51,500, costs of $23,600, depreciation expense of $2,400, and interest expense...
Pompeii, Inc., has sales of $51,500, costs of $23,600, depreciation expense of $2,400, and interest expense of $2,150. If the tax rate is 21 percent, what is the operating cash flow, or OCF? (Do not round intermediate calculations.)
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
A proposed project has fixed costs of $15,000, depreciation expense of $2,200, a sales quantity of...
A proposed project has fixed costs of $15,000, depreciation expense of $2,200, a sales quantity of 700, and EBIT of $1,580. What is the contribution margin per unit?
The variable cost per unit for a proposed project is $8.48 and the annual fixed costs...
The variable cost per unit for a proposed project is $8.48 and the annual fixed costs are $27,400. These costs can vary by ± 5 percent. Annual depreciation is $13,290 and the tax rate is 21 percent. The sale price is $13.29 a unit, ± 2 percent. If the firm bases its sensitivity analysis on the expected outcome, what will be the operating cash flow for a sensitivity analysis of 9,200 units? A. $14,066.02 B. $11,554.50 C. $22,078.40 D. $18,385.60...
A project as annual depreciation of $25,500, costs of $101,900, and sales of $150,500. The applicable...
A project as annual depreciation of $25,500, costs of $101,900, and sales of $150,500. The applicable tax rate is 34 percent. What is the operating cash flow?
Wright Communications is trying to estimate the first-year operating cash flow for a proposed project. The...
Wright Communications is trying to estimate the first-year operating cash flow for a proposed project. The financial staff has collected the following information: Financial Item: Projected Sales $21.81 million Expenses $18.00 million Depreciation $6.00 million Interest Expense $3.00 million The company faces a 40.00 percent tax rate. What is the project’s operating cash flow for year 1? (answer in units of millions)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT