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Taylor inc., the company you work for, is considering a new project whose data are shown below. what is the project's year 1 cash flow? sales revenues, each year $62,500 depreciation $8,000 other operating costs $25,000 interest expense $8,000 tax rate 35.0%



a. $28,534



b. $27,175



c. $25,816



d. $29,960

Respuesta :

Answer:

b. $27,175

Explanation:

The computation of the projected year 1 cash flow is shown below:

Sales revenues, each year $62,500

Less: Other operating costs    ($25,000)

Less: Depreciation expense ($8,000)

EBIT or Earning before interest and tax $29,500

Less: Tax at 35% ($10,325)

EAT or earning after tax  $19,175

Add: depreciation expense $8,000

Cash Flows $27,175

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