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(Calculating operating cash​ flows)  The Heritage Farm Implement Company is considering an investment that is expected...

(Calculating operating cash​ flows)  The Heritage Farm Implement Company is considering an investment that is expected to generate revenues of ​$2,700,000 per year. The project will also involve annual cash expenses​ (including both fixed and variable​ costs) of ​$1,050,000​, while increasing depreciation by ​$420,000 per year.

If the​ firm's tax rate is 36 ​percent, what is the​ project's estimated net operating profit after​ taxes?

What is the​ project's annual operating cash​ flow?

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Answer #1
Particulars Amount
Revenue           2,700,000
Expenses         (1,050,000)
Depreciation             (420,000)
PBT           1,230,000
Less: tax             (442,800)
Net operating profit after tax              787,200
Add: depreciation              420,000
Operating cash flow          1,207,200
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