Intro A new project is expected to generate annual sales of $140,000 and annual costs of...
Intro
A new project is expected to generate annual sales of $140,000 and annual costs of $133,000.
Annual depreciation attributable to the project is $60,000. The marginal tax rate is 34%.
Part 1
What is the supplemental operating cash flow in each year of operation?
Homework Answers
Operating cash flow = (Sales - costs - depreciation)(1 - tax) + depreciation
Operating cash flow = (140,000 - 133,000 - 60,000)(1 - 0.34) + 60,000
Operating cash flow = -34,980 + 60,000
Operating cash flow = $25,020
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Intro
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