QUESTION 16 2 points Sa A company is considering a 5-year project to open a new

Question

QUESTION 16 2 points Sa A company is considering a 5-year project to open a new product line. A new machine with an instaliled cost of $70,000 would be required to manufacture their new product, which is estimated to produce sales of $90,000 in new revenues each year The cost of goods sold to produce these sales (not including depreciation) is estimated at 56% of sales, and the tax rate at this firm is 38%, if straight-line depreciation is used to calculate annual depreciation. what is the estimated annual operating cash flow from this project each year? (Answer to the nearest dollar.)

Explanation / Answer

Sales $     90,000 Less: Costs $     50,400 90000*56% Depreciation $     14,000 70000/5 EBIT $     25,600 Less: Tax payable @ 38% $       9,728 Net income $     15,872 Add: Depreciation $     14,000 Operating cash flows for year (OCF) $     29,872

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.