In year 3 of project Gamma sales were $3,000,0000, cost of goods sold was $1,500,000, other cash costs were $400,000, depreciation was $600,000 and interest expense was $250,000.The company's marginal tax rate is 35%.Calculate operating cash flow for year 3 of project Gamma.
A)$925,000
B)$675,000
C)$500,000
D)$325,000

Question

Quizplus · Accepted Answer

Operating Cash Flow (OCF) is calculated using the formula: OCF = (Sales - Cost of Goods Sold - Other Cash Costs - Depreciation) * (1 - Tax Rate) + Depreciation. Plugging in the given values: OCF = ($3,000,000 - $1,500,000 - $400,000 - $600,000) * (1 - 0.35) + $600,000 = $925,000. Note that interest expense is not included in the OCF calculation.

In Year 3 of Project Gamma Sales Were $3,000,0000, Cost