ZuoTi.Pro
Question

A gym owner is considering opening a location on the other side of town. The new...

A gym owner is considering opening a location on the other side of town. The new facility will cost $1.38 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $541,000 in annual sales. Variable costs are 52 percent of sales, the annual fixed costs are $86,900, and the tax rate is 34 percent. What is the operating cash flow?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Sales $ 541,000 $ =541000*0.52+86900 =1380000/20 Less: Costs Depreciation EBIT Less: Tax @ 34% Net income Add: Depreciation $

Please rate thumbs up

0 0
Add a comment
Know the answer?
Add Answer to:
A gym owner is considering opening a location on the other side of town. The new...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A gym owner is considering opening a location on the other side of town. The new...

    A gym owner is considering opening a location on the other side of town. The new facility will cost $1.48 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $561,000 in annual sales. Variable costs are 48 percent of sales, the annual fixed costs are $90,900, and the tax rate is 35 percent. What is the operating cash flow?

  • A gym owner is considering opening a location on the other side of town. The new...

    A gym owner is considering opening a location on the other side of town. The new facility will cost $1.39 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $543,000 in annual sales. Variable costs are 53 percent of sales, the annual fixed costs are $87,300, and the tax rate is 35 percent. What is the operating cash flow?

  • Modern Designs Ltd. is considering opening up a new store in Perth. The store will have...

    Modern Designs Ltd. is considering opening up a new store in Perth. The store will have a life of 25 years. It will generate annual sales of 4,700 machines, and the price of each machine is $3,500. The annual sales of spare parts will be $655,000 and the operating expenses of the store, including labour & rent, will amount to 35% of the revenues from machines. The initial investment in the store will equal $20 million & will be fully...

  • Organic Produce is considering a new 6-year expansion project that requires an initial fixed asset investment...

    Organic Produce is considering a new 6-year expansion project that requires an initial fixed asset investment of $5.876 million. The fixed asset will be depreciated straight-line to zero over its 6-year tax life, after which time it will be worthless. The project is estimated to generate $5,328,000 in annual sales, with costs of $2,131,200. The tax rate is 32 percent. What is the annual operating cash flow for this project?

  • Modern Designs Ltd. is considering opening up a new store in Perth. The store will have...

    Modern Designs Ltd. is considering opening up a new store in Perth. The store will have a life of 25 years. It will generate annual sales of 4,700 machines, and the price of each machine is $3,500. The annual sales of spare parts will be $655,000 and the operating expenses of the store, including labour & rent, will amount to 35% of the revenues from machines. The initial investment in the store will equal $20 million & will be fully...

  • Regal Enterprises is considering the purchase of a new embroidering machine. It is expected to generate...

    Regal Enterprises is considering the purchase of a new embroidering machine. It is expected to generate additional sales of RM400,000 per year. The machine will cost RM295,000, plus RM3,000 to install it. The embroiderer will save RM12,000 in labor expense each year. The embroiderer will require annual operating expenses of RM136,000. Regal is in the 34% income tax bracket. The machine will be depreciated on a straight-line basis over five years. The company plans to sell the machine at the...

  • Phone Home, Inc. is considering a new 6-year expansion project that requires an initial fixed asset...

    Phone Home, Inc. is considering a new 6-year expansion project that requires an initial fixed asset investment of $5.876 million. The fixed asset will be depreciated straight-line to zero over its 6-year tax life, after which time it will be worthless. The project is estimated to generate $5,328,000 in annual sales, with costs of $1,831,200. The tax rate is 32 percent. What is the annual operating cash flow for this project? Group of answer choices $2,691,210 $1,894,318 $2,418,531 $2,487,211 $2,827,210

  • Your local athletic center is planning a $1.2 million expansion to its current facility. This cost...

    Your local athletic center is planning a $1.2 million expansion to its current facility. This cost will be depreciated on a straight-line basis over a 20-year period. The expanded area is expected to generate $745,000 in additional annual sales. Variable costs are 39* percent of sales, the annual fixed costs are $140,000, and the tax rate is 21 percent. What is the operating cash flow for the first year of this project?

  • 1) A five-year project is expected to generate annual revenues of $159,000, variable costs of $72,500,...

    1) A five-year project is expected to generate annual revenues of $159,000, variable costs of $72,500, and fixed costs of $15,000. The annual depreciation is $19,500 and the tax rate is 21 percent. What is the annual operating cash flow? 2) Your local athletic center is planning a $1.2 million expansion to its current facility. This cost will be depreciated on a straight-line basis over a 20-year period. The expanded area is expected to generate $745,000 in additional annual sales....

  • Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment...

    Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.48 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1993382 in annual sales, with costs of $741395. If the tax rate is 34 percent, what is the OCF for this project?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT