Question

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?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Operating cash flow is the amount of cash flows generated through the operating activities of the business.

Operating cash flows = EBIT - Taxes + Depreciation

Earning before interest and tax ( EBIT) = Sales - Variable cost - Depreciation

= 150500 - 101900 - 25500

EBIT =$23,100

Operating cash flows = 23100 - (23100*34%) + 25500

Operating Cash Flow = $40746

Note: Depreciation is a non cash expense and it is added back to Operating cash flow as we take tax benefit on it.

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 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?
A 7-year project is expected to provide annual sales of $217,000 with costs of $97,000. The...
A 7-year project is expected to provide annual sales of $217,000 with costs of $97,000. The equipment necessary for the project will cost $355,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-10 percent. The tax rate is 34 percent. What is the annual operating cash flow for the worst-case scenario?
A project is expected to generate annual revenues of $124,100, with variable costs of $77,200, and...
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?
A 7-year project is expected to provide annual sales of $169,000 with costs of $91,000. The...
A 7-year project is expected to provide annual sales of $169,000 with costs of $91,000. The equipment necessary for the project will cost $295,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-10 percent. The tax rate is 34 percent. What is the annual operating cash flow for the worst-case scenario? Multiple Choice $49,689 $32,009 $34,320 $82,969 $48,649
A company is considering a new 6-year project that will have annual sales of $207,000 and...
A company is considering a new 6-year project that will have annual sales of $207,000 and costs of $128,000. The project will require fixed assets of $247,000, 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?
A project with a life of 6 years is expected to provide annual sales of $340,000...
A project with a life of 6 years is expected to provide annual sales of $340,000 and costs of $237,000. The project will require an investment in equipment of $610,000, which will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 34 percent. What is the annual operating cash flow for the best-case scenario?
Jefferson & Sons is evaluating a project that will increase annual sales by $150,000 and annual...
Jefferson & Sons is evaluating a project that will increase annual sales by $150,000 and annual cash costs by $90,000. The project will initially require $100,000 in fixed assets that will be depreciated straight-line to a zero book value over the 5-year life of the project. The applicable tax rate is 40 percent. What is the operating cash flow for this project? a. $11,220 ( ) b. $29,920 ( ) c. $44,000 ( ) d. $46,480 ( ) e. $46,620
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
A company is considering a new 6-year project that will have annual sales of $198,000 and...
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
Bennett Co. has a potential new project that is expected to generate annual revenues of $263,900,...
Bennett Co. has a potential new project that is expected to generate annual revenues of $263,900, with variable costs of $144,800, and fixed costs of $61,900. To finance the new project, the company will need to issue new debt that will have an annual interest expense of $25,500. The annual depreciation is $25,600 and the tax rate is 40 percent. What is the annual operating cash flow?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT