Calculating operating cash flow for year 3:
Tax revenues | 40,000 |
(-)Depreciation | -15,000 |
Income before Tax | 25,000 |
(-)Tax | -8,500 |
Net Income | 16,500 |
(+)Depreciation | 15,000 |
Operating Cash Flow | 31,500 |
Working Note:
Depreciation for year 3 = 100,000 x 15% = 15,000
Note that profit on sale of asset is not operational in nature and hence ignored.
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