A cost-cutting project will decrease costs by $58,500 a year.The annual depreciation on the project's fixed assets will be $10,300 and the tax rate is 34 percent.What is the amount of the change in the firm's operating cash flow resulting from this project?

Question

Quizplus · Accepted Answer

Change in operating cash flow = [$58,500 × (1 - 0.34)] + [$10,300 × 0.34] = $42,112

A Cost-Cutting Project Will Decrease Costs by $58,500 a Year