Question

a proposed new project has projected sales of $215,000, costs of $104,000, and depreciation of $25,300. the tax rate is 23 percent. calculate operating cash flow using the four different approaches.

Answer 1

The operating cash flow can be calculated using four different approaches: net income + depreciation, sales - costs - depreciation, (sales - costs) * (1 - tax rate) + depreciation, and EBIT * (1 - tax rate) + depreciation. Using the given values of projected sales, costs, depreciation, and tax rate, the operating cash flow is $240,300, $85,700, $104,505, and $104,505 respectively.

Step-by-step explanation:

The operating cash flow can be calculated using four different approaches:

1. Approach 1: Net Income + Depreciation = Operating Cash Flow
2. Approach 2: Sales - Costs - Depreciation = Operating Cash Flow
3. Approach 3: (Sales - Costs) * (1 - Tax Rate) + Depreciation = Operating Cash Flow
4. Approach 4: Earnings Before Interest and Taxes (EBIT) * (1 - Tax Rate) + Depreciation = Operating Cash Flow

Using the given values:

• Approach 1: $215,000 + $25,300 = $240,300
• Approach 2: $215,000 - $104,000 - $25,300 = $85,700
• Approach 3: ($215,000 - $104,000) * (1 - 0.23) + $25,300 = $104,505
• Approach 4: ($215,000 - $104,000) * (1 - 0.23) + $25,300 = $104,505

Answer 2

To calculate the operating cash flow using the four different approaches, subtract the costs and depreciation from the projected sales.

Step-by-step explanation:

To calculate the operating cash flow using the four different approaches, we need to subtract the costs and depreciation from the projected sales.

• First approach: Operating Cash Flow = Sales - Costs - Depreciation
• Second approach: Operating Cash Flow = Sales - Taxes
• Third approach: Operating Cash Flow = Sales - Costs - Taxes
• Fourth approach: Operating Cash Flow = Sales - Costs - Depreciation - Taxes

Using the given information, the operating cash flow for each approach would be:

• First approach: $85,700
• Second approach: $165,050
• Third approach: $156,350
• Fourth approach: $130,050