Answer:
The incremental operating cash flow for yea one=$1,020,000
Explanation:
<em>Step 1: Determine the net increase in operating cash flow</em>
The net operating cash flow can be expressed as;
net increase in operating cash flow=increase in sales+decrease in non-depreciation expenses-increase in depreciation expense
where;
increase in sales=$1,100,000
decrease in non-depreciation expenses=$500,000
increase in depreciation expense=$1,100,000
replacing;
net increase in operating cash flow=1,100,000+1,100,000-500,000=$1,700,000
<em>Step 2: Determine the net increase in operating cash flow after taxes</em>
net increase in operating cash flow after taxes=net increase in operating cash flow-taxes
where;
net increase in operating cash flow=$1,700,000
taxes=(40/100)×1,700,000=$680,000
replacing;
net increase in operating cash flow=1,700,000-680,000=$1,020,000
The incremental operating cash flow for yea one=$1,020,000
