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In its third year, a project is expected to produce earnings before interest and taxes of $671,551 and depreciation expense of $125,193. If the company’s tax rate is 34%, what is the project’s expected operating cash flow?

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facundobuzzetti

Answer:

Operating cash flow= $568,416.66

Explanation:

Giving the following information:

Earnings before interest and taxes= $671,551

Depreciation expense= $125,193.

Tax rate= 34%

To calculate the operating cash flow, we need to use the following structure:

EBIT= 671,551

Tax= (671,551*0.34)= (228,327.34)

Depreciation= 125,193

Operating cash flow= 568,416.66