Your company, Omega Corporation, is considering a new project that you must analyze. Based on the following data, what is the project's Year 1 operating cash flow? Sales revenues$25,000
Capital cost allowance$8,000
Cash operating costs$12,000
Tax rate35.0%
A) $10,585
B) $10,913
C) $11,250
D) $11,588

Question

Quizplus · Accepted Answer

Operating cash flow is calculated as: (Sales revenues - Cash operating costs) * (1 - Tax rate) + Capital cost allowance. Plugging in the values: ($25,000 - $12,000) * (1 - 0.35) + $8,000 = $11,250.

Your Company, Omega Corporation, Is Considering a New Project That