You work for the Sing Oil Company,which is considering a new project whose data are shown below.What is the project's net operating cash flow for Year 1? $\begin{array}{l}
\begin{array}{l}
\text { Sales revenues, each } \
\text { Capital cost allowanc } \
\text { Cash operating costs } \
\text { Interest expense } \
\text { Tax rate }
\end{array}
\begin{array}{r}
\$ 55,000 \
\$ 8,000 \
\$ 25,000 \
\$ 8,000 \
35.0 \%
\end{array}
\end{array}$
A)$21,185
B)$22,300
C)$24,586
D)$25,815

Question

Quizplus · Accepted Answer

Net operating cash flow can be calculated using the formula:

Net operating cash flow = Sales revenues - Cash operating costs - Interest expense - Taxes

Plugging in the given values:

Net operating cash flow = $55,000 - $25,000 - $8,000 - (35% x ($55,000 - $8,000))

Net operating cash flow = $22,300 (rounded to the nearest dollar)

Therefore, the answer is choice B.

You Work for the Sing Oil Company,which Is Considering a New