Question

Fill in the missing numbers for the following statement of comprehensive income. (Input all amounts as...

Fill in the missing numbers for the following statement of comprehensive income. (Input all amounts as positive values. Omit $ sign in your response.)

Sales $ 728,500
Costs 501,800
Depreciation 88,900
EBIT $
Taxes (34%)
Net income $

Calculate the OCF.

OCF           $

What is the CCA tax shield?


CCA tax shield           $

Homework Answers

Answer #1

Operating Cash Flow =Net Income+Non cash expenses -Increase In working Capital(here increase in working capital =0)

or Sales -Costs -tax (answer will be the same in both cases)

Net Income=Sales -COGS-Fixed Expenses(depreciation)-Taxes

Particulars Amount
Sales 728,500
COGS 501,800
Gross profit 226700
Less Depreciation 88900
EBIT 137800
Less Tax@34% 46852
Net Income 90948

Net Income =$90,948

Depreciation(non cash expense) =$88,900

Operating Cash flow(OCF) =$90,948+88,900=179,848

CCA tax shield =Depreciation expense *tax rate

tax rate =34%

Depreciation=$88,900

CCA tax shield =$88,900*34%=30,226

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