Question

A five-year project is expected to generate annual revenues of $159,000, variable costs of $72,500, and fixed costs of $15,000. The annual depreciation is $19,500 and the tax rate is 21 percent. What is the annual operating cash flow

Answer 1

Answer:

$60,580

Explanation:

According to the scenario, computation of the given data are as follow:-

Operating Cost Flow  is

Particular               Amount($)

Sales                       $159,000

Less - Variable cost    -$72,500

Less - Fixed cost       -$15,000

Less - Depreciation      -$19,500

Total Before Tax       $52,000

Less: tax expense        -$10,920     ($52,000 × 21%)

Add - Depreciation $19,500

Operating cash flow $60,580

The operating cash flow is the cash flow in which the cash is generated in order to paying off the expenses