You have just landed an internship in the CFO's office of Hawkesworth Inc. Your first task is to estimate the Year 1 cash flow for a project with the following data. What is the Year 1 cash flow? $\begin{array}{l}
\begin{array}{l}
\text { Sales revenues } \
\text { Depreciation } \
\text { Other operating costs } \
\text { Tax rate }
\end{array}
\begin{array}{r}
\$ 13,000 \
\$ 4,000 \
\$ 6,000 \
350 \%
\end{array}
\end{array}$

Question

Quizplus · Accepted Answer

$\begin{array}{lr}
\text { Sales revenues }&&\$ 13,000 \
\text { - Operating costs (excl. deprec.) }&&6,000 \
\text { - Depreciation }&&4,000\
\text { Operating income (EBTT) }&&\$ 3,000 \
\text { - Taxes }&\text { Rate }=35 \%&1,050\
\text { After-tax EBIT }&&\$ 1,950 \
\text { $ + $ Depreciation }&&4,000\
\text { Cash flow. Year 1 }&&\$ 5,950
\end{array}$

You Have Just Landed an Internship in the CFO's Office