Answer:Operating cash flow $ _50,250__
Yes, the answer is same in each case
Explanation:
a) EBIT + Depreciation - Tax
= ($132,000-$66,000-$13,500) + $13,500 - Tax
= $52,500 + $13,500-(30% x $52,500)
=$52,500 + $13,500-15,750
EBIT + Depreciation - Tax=$50,250
b)Top down OCF = EBIT - (EBIT x Tax) + Depreciation
Top down OCF = $52,500 - ($52,500 x 30%) + $13,500
Top down OCF = $52,500 -15,750 + $13,500
Top down OCF =$50,250
Tax shield OCF =(Sales - Cost)(1-t) + Depreciation (t)
Tax shield OCF = ($132,000-$66,000) (1-0.30) + ($13,500 x0.30)
Tax shield OCF =$66,000 x 0.7 + 4,050
Tax shield OCF = 46,200+ 4,050
Tax shield OCF = $50,250
Bottom Up OCF = Net Income + Dep
Bottom Up OCF =($132,000-$66,000-$13,500 ) - Tax ) + Dep
Bottom Up OCF = $52,500-(0.3 x $52,500 )+ $13,500
Bottom Up OCF = $52,500 -15,750 + $13,500
Bottom Up OCF =$50,250
2. Yes, the answer is same in each case
