Question

a project is expected to generate annual revenues of $130,500, with variable costs of $79,600, and fixed costs of $20,100. the annual depreciation is $4,650 and the tax rate is 21 percent. what is the annual operating cash flow?

Answer 1

The annual operating cash flow is $15,920.

Step-by-step explanation:

The annual operating cash flow can be calculated by subtracting the variable costs, fixed costs, and depreciation from the annual revenues, and then subtracting the tax expense.

Operating Cash Flow = Annual Revenues - Variable Costs - Fixed Costs - Depreciation - Tax Expense

Using the given values:

• Annual Revenues = $130,500
• Variable Costs = $79,600
• Fixed Costs = $20,100
• Depreciation = $4,650
• Tax Rate = 21%

We can now calculate the annual operating cash flow:

Operating Cash Flow = $130,500 - $79,600 - $20,100 - $4,650 - ($130,500 - $79,600 - $20,100 - $4,650) * 0.21

Simplifying the equation:

Operating Cash Flow = $130,500 - $79,600 - $20,100 - $4,650 - $10,230

Operating Cash Flow = $15,920