Question

A five-year project is expected to generate annual revenues of $ 159,000, variable costs of $72,500, and fixed costs of $15,000. The annual depreciation is $19,500 and the tax rate is 21 percent. What is the annual operating cash flow?

Answer 1

Operating Cash flow

$           60,580

Working:

Revenues			$       1,59,000
Variable cost			72,500
Contribution Margin			86,500
Fixed Cost			34,500
Profit Before tax			52,000
Tax Expense			10,920
Net Income			41,080
Depreciation			19,500
Operating Cash flow			$           60,580
Working:
Fixed Cost other than depreciation			$           15,000
Depreciation			$           19,500
Total Fixed Cost			$           34,500