Question

A project has annual depreciation of $19,100, costs of $92,300, and sales of $134,500. The applicable tax rate is 40 percent. What is the operating cash flow?

Answer 1

The operating cash flow for the project is $32,860.

Step-by-step explanation:

To calculate the operating cash flow, we need to use the formula: Operating Cash Flow = Sales - Costs - Depreciation + Taxes. Given that the project has annual depreciation of $19,100, costs of $92,300, and sales of $134,500, we can plug these values into the formula. The tax rate is 40 percent, so Taxes = (Sales - Costs - Depreciation) * 0.4. Substituting the values, we get Taxes = ($134,500 - $92,300 - $19,100) * 0.4 = $8,760. Now we can calculate the Operating Cash Flow = $134,500 - $92,300 - $19,100 + $8,760 = $32,860.