Jones Company expects the following results in year one of a new project:
The annual change in operating cash flow is equal to

Question

Jones Company expects the following results in year one of a new project:
 The annual change in operating cash flow is equal to

Quizplus · Accepted Answer

The annual change in operating cash flow can be calculated by subtracting the initial year's operating cash flow from the projected year's operating cash flow. However, the initial year's operating cash flow is not given in the information provided. Therefore, we cannot determine the exact amount of the annual change in operating cash flow. Instead, we can only determine the total change in operating cash flow over the project's life. The total increase in operating cash flow over the project's life is given as $1,010,000 ($1,560,000 - $550,000). If we assume that this increase occurs evenly over the project's life, we can divide the total increase by the project's life (5 years) to get the annual change. Therefore, the annual change in operating cash flow is equal to $202,000 ($1,010,000 / 5 years).

Jones Company Expects the Following Results in Year One of a New