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Your local athletic center is planning a $1.23 million expansion to its current facility. This cost will be depreciated on a

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Answer #1

Computation Of Depreciation Expense

Depreciation Expense = [Cost] / Useful life

Depreciation Expense = $1,230,000 / 20 years = $61,500

Depreciation Expense = $61,500

Computation of EBIT and Income tax

Sales = $524,000

Less: Cost = $330,920

Less: Depreciation = $61,500

EBIT = $131,580

Less: Tax (35%) = $46,053

Operating Cash Flow = EBIT + Depreciation - income tax

Operating Cash Flow = $131,580 + $61,500 - $46,053

Operating cash Flow = $147,027

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