(Calculating operating cash flows) The Heritage Farm Implement Company is consid
ID: 1172495 • Letter: #
Question
(Calculating operating cash flows) The Heritage Farm Implement Company is considering an investment that is expected to generate revenues of $3,200,000 per year. The project will also involve annual cash expenses (including both fixed and variable costs) of $700,000, while increasing depreciation by $360,000 per year. If the firm's tax rate is 30 percent, what is the project's estimated net operating profit after taxes? What is the project's annual operating cash flow? At a tax rate of 30%, the project's estimated net operating profit after taxes (NOPAT) is $ . (Round to the nearest dollar)Explanation / Answer
Calculation of NOPAT
Total revenue -3200000
(-) Annual cash expenses -700000
(-) Depreciation -360000
Net income before tax 21,40,000
(-) Tax @30% 642000
NOPAT 1498000
Calculation of Annual operating cash flow
Net Income -1498000
(Add) Depreciation 360000
So Operating cash flow 1858000
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