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project's Year 1 cash flow

Your company, RMU Inc., is considering a new project whose data are shown below. What is the project's Year 1 cash flow?

Sales revenues………………$22,250
Depreciation ………………..$ 8,000
Other operating costs ……….$12,000
Tax rate …………………….. 35.0%

a. $10,039
b. $8,903
c. $9,746
d. $9,463
e. $9,179
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Answer #1
Sales revenues………………$22,250
Less Depreciation ………………..$ 8,000
Less Other operating costs ……….$12,000
------------------------------------------------
Income before tax $2250
Less Tax 35% 787
--------------------------------
PAT $1463
Add Back Dep $8000
-------------------------
Net CF $9463 ...........Ans (d)

answered by: kwezi simelane
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Answer #2

Your company, RMU Inc., is considering a new project whose data are shown below. What is the project's Year 1 cash flow?

Sales revenues………………$22,250
Depreciation ………………..$ 8,000
Other operating costs ……….$12,000
Tax rate …………………….. 35.0%

a. $10,039
b. $8,903
c. $9,746
d. $9,463
e. $9,179

answered by: Doorstep Flowers India
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Answer #3
D: 9463

(Depreciation is not a cash flow, but it will affect cash flow for the taxes paid)
answered by: kolapo
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Answer #4
D. 9463.
22,250 Sales Revenue
- 12,000 operating expense
- 787.50 less tax (22,250 - 8000 - 12000 times 35%)
= 9463 rounded up
answered by: Howler
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Answer #5
cash flow before tax = 22250 - 8000 - 12000 = 2250
cash flow after tax = 2250( 1-0.35) = 1462.5
depreciation is to be added to get year 1 cash flow
so 8000 + 1462.5 = 9462.5 = 9463
answered by: peta
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Answer #6
c. $9,746
answered by: Julianne
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Answer #7
22,250 - 12,000 - (22250-8000-12000)*0.35 = $9463

D
answered by: Uru
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