Question

A nine-year project is expected to generate annual revenues of $137,800, variable costs of $82,600, and fixed costs of $11,000. The annual depreciation is $23,500 and the tax rate is 34 percent. What is the annual operating cash flow?

Answer 1

Answer:

$37,162

Explanation:

Operating cashflow (OCF) =

(Revenues- variable costs-fixed costs- depreciation)(1-tax) + depreciation

Revenues = 137800

Variable costs = 82600

Fixed costs = 11000

Depreciation = 23500

Tax = 34%

So, OCF = (137800-82600-11,000-23500)(1-0.34) + 23500

= 20700(1-0.34) +23500

= 13662 + 23500

OCF =37162

Therefore, annual operating cashflow is $37,162