Question

Truman Inc. is trying to estimate the operating cash flows for a single year project. The financial staff has collected the following information on the project:

Sales Revenue	$10,000,000
Operating Cost excluding depreciation	$7,000,000
Annual Depreciation Expense	$2,000,000
Annual Interest Expense	$2,500,000
Corporate Tax Rate	36%

Calculate the operating cash flow for this one-year project. Enter your answer as a whole number (with 0 decimal places) Do not enter dollar signs or commas.

Answer 1

sales less: Costs less: Depreciation EBIT less: Interest less: tax $10,000,000 $7,000,000 $2,000,000 $1,000,000 $2,500,000 $540,000 $960,000 Net income Operating cash flow = EBIT + Depreciation-Taxes $3,540,000 [ 1000000+2000000+540000 ]