A 9-year project is expected to generate annual revenues of $114,500, variable costs of $73,600, and fixed costs of $14,000. The annual depreciation is $3,500 and the tax rate is 34 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. Substituting the given values: ($114,500 - $73,600 - $14,000 - $3,500) * (1 - 0.34) + $3,500 = $18,944.

A 9-Year Project Is Expected to Generate Annual Revenues of $114,500