Question

A project is expected to generate annual revenues of $126,500, with variable costs of $78,100, and fixed costs of $18,600. The annual depreciation is $4,400 and the tax rate is 34 percent. What is the annual operating cash flow

Answer 1

$21,164

Step-by-step explanation:

The operating cash flow comprises net income and depreciation, since depreciation is not an actual cash outflow, it is added to the net income in order to ascertain operating cash flow.

net income=(revenue-variable costs-fixed costs-depreciation)*(1-tax rate)

net income=($126,500-$78,100-$18,600-$4,400)*(1-34%)

net income=$16,764

operating cash flow=net income+depreciation

depreciation=$4,400

the annual operating cash flow=$16,764+$4,400

the annual operating cash flow=$21,164