A five-year project is expected to generate annual revenues of $159,000, variable costs of $72,500, and fixed costs of $15,000.The annual depreciation is $19,500 and the tax rate is 21 percent.What is the annual operating cash flow?

Question

Quizplus · Accepted Answer

Operating cash flow is calculated as: (Revenues - Variable Costs - Fixed Costs - Depreciation) * (1 - Tax Rate) + Depreciation. Plugging in the values: ($159,000 - $72,500 - $15,000 - $19,500) * (1 - 0.21) + $19,500 = $60,580.

A Five-Year Project Is Expected to Generate Annual Revenues of $159,000