You work for Canada Corp.Inc.,and you must estimate the Year 1 operating cash flow for a project with the following data.What is the Year 1 operating cash flow? $\begin{array}{ll}
\text { Sales revenues } & \$ 25,000 \
\text { Capital cost allowance } & \$ 5,000 \
\text { Cash operating costs } & \$ 12,000 \
\text { Tax rate } & 40.0 \%
\end{array}$

Question

Quizplus · Accepted Answer

The Year 1 operating cash flow can be calculated as follows: 1. Calculate the taxable income: Sales revenues - Cash operating costs - Capital cost allowance = $25,000 - $12,000 - $5,000 = $8,000.2. Calculate the tax: Taxable income * Tax rate = $8,000 * 40% = $3,200.3. Calculate the operating cash flow: Sales revenues - Cash operating costs - Tax = $25,000 - $12,000 - $3,200 = $9,800.

You Work for Canada Corp A)$9,800 B)$12,500 C)$17,000 D)$12,000

You Work for Canada Corp A)$9,800
B)$12,500
C)$17,000
D)$12,000