Your local athletic center is planning a $500,000 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 $175,000 in additional annual sales. Variable costs are 32 percent of sales, the annual fixed costs are $40,000, and the tax rate is 21 percent. What is the operating cash flow for the first year of this project?
Annual depreciation = 500,000 / 20 = 25,000
variable costs = 175,000 * 0.32 = 56,000
Operating cash flow = (Sales - variable costs - fixed costs - depreciation)(1 - tax) + depreciation
Operating cash flow = (175,000 - 56,000 - 40,000 - 25,000)(1 - 0.21) + 25,000
Operating cash flow = 42,660 + 25,000
Operating cash flow = $67,660
Your local athletic center is planning a $500,000 expansion to its current facility. This cost will...
Your local athletic center is planning a $500,000 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 $175,000 in additional annual sales. Variable costs are 32 percent of sales, the annual fixed costs are $40,000, and the tax rate is 21 percent. What is the operating cash flow for the first year of this project? Multiple Choice $62,410.00 $99,260.00 $67,660.00 $42,660.00 $31,450.00
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?
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? $218,336.00 $201,015.00 $261,015.50 $371,615.50 $314,450.00
Your local athletic center is planning a $1.23 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 $524,000 in additional annual sales. Additional cost is $330920, and the tax rate is 35 percent. What is the yearly depreciation? What is the operating cash flow for the first year of this project? O $61000; $118,336 O $61500; $122,509 O $61500; $147,027 O $61000; $166,667
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4) Franco’s athletic club is planning an expansion. The owner is either going to build a completely new building or just add on to the existing facility. A new building will cost $10 million, but it is expected to increase revenues by $2 million (before taxes) per year for ten years. An add-on to the current facility will only cost $500,000, but projections are that it will lead to an increase in revenues of only $150,000 (before taxes) per year...
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?
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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.644 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $361,200. The project requires an initial investment in net working capital of $516,000. The project is estimated to generate $4,128,000 in annual sales, with costs of $1,651,200. The tax rate is 32 percent and the required...