Answer:
The answer is: e
Explanation:
Operating cash flow is the cash amount generated from the operating activities of a company. This is normally reported in the cash flow statements of a company under its operating activities. The main components of the operating cash flow is: net income (revenue less cost of sales) plus depreciation less any applicable taxes added to any changes in working capital. In the project under consideration by Marie's fashions, the net working capital appears to be fixed at $28,000, making the changes in working capital equal to zero over the life of the project. Working capital would therefore not be included in the calculation. The rest of the calculation is computed as follows:
Net income: $75,000 - $57000 = $18,000
Applicable tax payable: $18000 * 30% = 54000
Net income after tax: $12, 600
Depreciation: $87000/5 = $17400
Applicable tax deduction: $17400*30%
Tax relief for depreciated asset value: $5220
Total free cash flow = $12600 + $5220
= $17820
