Answer:
The cash flows to investors from operating activity is $402,126.25
Explanation:
For computing the cash flow from operating activity, first, we have to compute the net income which is shown below:
= Sales - cost of goods sold - depreciation expense - interest expense - income tax expense
where,
The income tax expense equals to
= (Sales - cost of goods sold - depreciation expense - interest expense) × income tax rate
= $1,430,000 - $816,000 - $175,000 - $89,575) × 35%
= $122,298.75
The other items values would remain the same
Now put these values to the above formula
So, the value would equal to
= $1,430,000 - $816,000 - $175,000 - $89,575 - $122,298.75
= $227,126.25
Now the cash flow from operating activity equals to
= Net income + depreciation expense
= $227,126.25 + $175,000
= $402,126.25
