contestada

The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service:Projected sales $20 millionOperating costs (not including depreciation) 8 millionDepreciation 5 millionInterest expense 4 millionThe company faces a 40% tax rate. What is the project's operating cash flow for the first year (t = 1)?

Respuesta :

The project's operating cash flow for the first year (t = 1) is $920000

Explanation:

The operating cash flow is calculated as follows:

Particulars                                                                   amount

                                                                             ( in dollars )

sales                                                                         20,00,000

less: operating cost                                                    800000

less: depreciation                                                       500000

earnings before interest and tax                             700000

less: tax at 40 percent on EBIT                                  280000

Net income before interest                                      420000

add: depreciation                                                           500000

operating cash flow                                                    920000

Note : operating cash flow of a company means the flow of cash which has been arisen from the operating activities conducted in a business organization

depreciation is a non cash expense.

Otras preguntas