Operating Cash Flow The financial staff of Cairn Communications has identified t

Question

Operating Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $25 million Operating costs (not including depreciation) 8 million Depreciation 6 million Interest expense 5 million The company faces a 30% tax rate. What is the project's operating cash flow for the first year (t = 1)? Write out your answer completely. For example, 2 million should be entered as 2,000,000.

Note-- That answer is not 10,200,000.

Explanation / Answer

Calculation of the Operating Cash Flows Sales 25000000 Less: Operating Cost -8000000 Less: Interest -5000000 Less: Taxed -1800000 ( 25-8-5-6)*30% Operating Cash Flows 10200000

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