Question

Values for the first year of a project are projected as: Sales = $1.800, Depreciation = $300, Fixed costs = $450, Variable costs = $620, Tax rate = 34 percent, What is the OCF?

Answer 1

Answer:

the operating cash flow or OCF is $583.80

Explanation:

The computation of the operating cash flow or OCF is given below:

= (Sales - variable cost - fixed cost - depreciation) × (1 - tax rate) + depreciation expense

= ($1,800 - $620 - $450 - $300) × (1 - 0.34) + $300

= $430 × 0.66 + $300

= $283.80 + $300

= $583.80

Hence, the operating cash flow or OCF is $583.80