Question

As a member of UA Corporation's financial staff, you must estimate the Year 1 cash flow for a proposed project with the following data. What is the Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number. Sales revenues, each year $40,000 Depreciation $10,000 Other operating costs $17,000 Interest expense $4,000 Tax rate 35.0%

Answer 1

Answer:

$15,850

Explanation:

Particulars                                   Amount

Sales revenues, each year        $40,000

Less : Depreciation                    $10,000

Less : Other operating costs     $17,000

EBIT                                             $13,000

Less : Interest expense              $4,000

EBT/PBT                                      $9,000

Less: Tax at 35%                         $3,150  ($9,000*35%)

PAT                                              $5,850

Add: Depreciation                       $10,000

Cash flow after taxes                 $15,850