Question

A project is expected to generate annual revenues of $124,100, with variable costs of $77,200, and fixed costs of $17,700. The annual depreciation is $4,250 and the tax rate is 34 percent. What is the annual operating cash flow?

Answer 1

HI

Here revenue = $124,100

variable cost = $77,200

fixed cost = $17,700

depreciation = $4,250

tax =24%

Operating cash flow=?

Operating cash flow = Net Income + Depreciation - change in net working capital

here EBITDA = 124100 - 77200 - 17,700 = $29,200

depreciation = $4,250

hence Operating Income EBIT= 29200 - 4250 = $24,950

tax rate = 34%

so Net Income = 24950*(1-tax rate)

=24950*(1-0.34) =   $16,467

Hence Operating Cash flow = 16467 +4250 -0

=$20,717

Thanks