Final answer:
The annual operating cash flow of the project is $29,641, calculated by first determining the project's net income before taxes and then adjusting for taxes and non-cash expenses like depreciation.
Step-by-step explanation:
To calculate the annual operating cash flow for a project, you must start with the formula:
Operating Cash Flow = (Revenues - Variable Costs - Fixed Costs + Depreciation) * (1 - Tax Rate) + Depreciation
From the information provided, plugging in the numbers:
Revenues = $114,500
Variable Costs = $73,600
Fixed Costs = $14,300
Depreciation = $3,650
Tax Rate = 21%
Calculating the operating cash flow:
Operating Cash Flow = ($114,500 - $73,600 - $14,300 + $3,650) * (1 - 0.21) + $3,650
Operating Cash Flow = ($29,250 + $3,650) * 0.79 + $3,650
Operating Cash Flow = ($32,900) * 0.79 + $3,650
Operating Cash Flow = $25,991 + $3,650
Operating Cash Flow = $29,641
Therefore, the annual operating cash flow of the project is $29,641.