(Calculating operating cash flows) The Heritage Farm Implement Company is consid
ID: 2787232 • Letter: #
Question
(Calculating operating cash flows) The Heritage Farm Implement Company is considering an investment that is expected to generate revenues of $3,100,000 per year. The project will also involve annual cash expenses (including both fixed and variable costs) of $1,200,000, while increasing depreciation by $350,000 per year. f the firm's tax rate is 37 percent, what is the project's estimated net operating profit after taxes? What is the project's annual operating cash flow? At a tax rate of 37%, the project's estimated net operating profit after taxes NOPAT) is SL (Round to the nearest dollar.)Explanation / Answer
NOPAT= EBIT*(1-t)
= Revenue. 3100000$
Annual expenses. (1200000)
EBIT. . 1900000$
EBIT after tax(0.63). 1197000$
Add: depreciation tax shield 350000*0. 37= 129500$
Annual operating cashflows = 1326500$
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