Bennett Co. has a potential new project that is expected to generate annual revenues of $248,600, with variable costs of $138,000, and fixed costs of $56,800. To finance the new project, the company will need to issue new debt that will have an annual interest expense of $17,000. The annual depreciation is $22,200 and the tax rate is 34 percent. What is the annual operating cash flow?
A. $43,056
B. $118,148
C. $167,412
D. $76,000
E. $44,348
Tax rate | 34% | |
Year-0 | Year-1 | |
Sale | 248,600 | |
Less: Operating Cost | 138,000 | |
Contribution | 110,600 | |
Less: Fixed Cost | 56,800 | |
Less: Depreciation as per table given below | 22,200 | |
Profit before tax | 31,600 | |
Tax | 10,744 | |
Profit After Tax | 20,856 | |
Add Depreciation | 22,200 | |
Cash Profit After tax | 43,056 |
So option A is correct
Bennett Co. has a potential new project that is expected to generate annual revenues of $248,600,...
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