Question

Bi-Lo Traders is considering a project that will produce sales of $39,050 and have costs of $22,700. Taxes will be $4,000 and the depreciation expense will be $2,275. An initial cash outlay of $1,850 is required for net working capital. What is the project's operating cash flow?

Answer 1

$12,350

Step-by-step explanation:

The operating cash flow is shown below:

= EBIT + Depreciation - Income tax expense

where,

EBIT = Sales - cost of good sold - depreciation expense

= $39,050 - $22,700 - $2,275

= $14,075

And all other items would remain same

Now put these values to the above formula

So, the value would equal to

= $14,075 + $2,275 - $4,000

= $12,350