Homework: Homework Three Score: 0 of 2 pts P12-12 (similar to) Save 4 of 10 (0 c

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Homework: Homework Three Score: 0 of 2 pts P12-12 (similar to) Save 4 of 10 (0 complete) Hw Score: 0%, 0 of 20 pts Question Help * (Related to Checkpoint 12.1) (Calculating operating cash flows) Assume that a new project will annually generate revenues of $2,400,000 and cash expenses (including both fixed and variable costs) of $500,000, while increasing depreciation by $230,000 per year. In addition, the firms tax rate is 35 percent Calculate the operaing cash flows for the new project The firm's operating cash flows aro$ (Round to the nearest dolar.) Enter your answer in the answer box and then click Check Answer

Explanation / Answer

Answer:

Operating Income = Revenue – Cash Expenses – Depreciation
Operating Income = $2,400,000 - $500,000 - $230,000
Operating Income = $1,670,000

After Tax Operating Income = $1,670,000 – ($1,670,000 * 35%)
After Tax Operating Income = $1,085,500

Operating Cash Flow = After Tax Operating Income + Depreciation
Operating Cash Flow = $1,085,500 + $230,000
Operating Cash Flow = $1,315,500

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