Which one of the following is a correct method for computing the operating cash flow of a project assuming that the interest expense is equal to zero?
A) EBIT + Depreciation
B) EBIT(1 + Taxes)
C) Net income + Depreciation
D) (Sales − Costs)(1 − Depreciation)(1 − Taxes)
E) (Sales − Costs)(1 − Taxes)

Question

Quizplus · Accepted Answer

Operating cash flow can be calculated by adding net income and depreciation. Net income does not include interest expenses (assuming they are zero in this case), and depreciation is added back because it is a non-cash expense that was subtracted to get net income.

Which One of the Following Is a Correct Method for Computing