Question

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P12-13 (similar to) Question Help (Calculating operating cash flows) The Heritage Farm Implement Company is considering an investment that is expected to generate revenues of $2,600,000 per year. The project will also involve annual cash expenses (including both fixed and variable costs) of $1,050,000, while increasing depreciation by $440,000 per year. the firm's tax rate is 31 percent, what is the project's estimated net operating proftator taxes? What is the project's annual operating cash flow? At a tax role of 31%, the project's estimated net operating profit after taxes (NOPAT) I (Round to the nearest dollar) Enter your answer in the answer box and then click Check Answer. Clear All Check rower ► 1 part remaining L isWXPO

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

B M700 Revenue Annual Costs Depreciation EBT Tax(31%) NOPAT $2,600,000.00 $1,050,000.00 $440,000.00 $1,110,000.00 $344,100.00 $765,900.00 Annual operation Cash Flow $1,205,900.00 10 11

Cell reference -

в Revenue Annual Costs Depreciation EBT 2600000 1050000 440000 =C2-C3-C4 =5*0.31 =C5-C6 Tax(31%) NOPAT Annual operation Cash Flow =C7+C4

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.