Theresa is considering starting a small business.She plans to purchase equipment costing $145,000.Rent on the building used by the business will be $26,000 per year while other operating costs will total $30,000 per year.A market research specialist estimates that Theresa's annual sales from the business will amount to $80,000.Theresa plans to operate the business for 6 years.Disregarding the effects of taxes,what will be the amount of annual net cash flow generated by the business?

Question

Quizplus · Accepted Answer

Annual net cash flow = Annual sales - Annual operating costs - Annual depreciation= $80,000 - $26,000 - $30,000 - $145,000/6= $80,000 - $56,000= $24,000

Theresa Is Considering Starting a Small Business