The Tate Manufacturing Company has $150 million in sales revenue with $90 million in cost of goods sold.It has selling and administrative expenses of $10,pays annual taxes in the amount of $10 and has depreciation and other non-cash expenses of $30 million.What are this firm's annual projected cash flows?

Question

Quizplus · Accepted Answer

To calculate the annual projected cash flows, we need to start with the firm's net income and then add back any non-cash expenses like depreciation.

Net income = Sales revenue - Cost of goods sold - Selling and administrative expenses - Taxes 
Net income = $150 million - $90 million - $10 million - $10 million 
Net income = $40 million

Annual projected cash flows = Net income + Depreciation and other non-cash expenses 
Annual projected cash flows = $40 million + $30 million 
Annual projected cash flows = $70 million

Therefore, the correct answer is choice C) $70 million.

The Tate Manufacturing Company Has $150 Million in Sales Revenue