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You work for Whitteberg Inc., which is considering a new project whose data is shown below....

  1. You work for Whitteberg Inc., which is considering a new project whose data is shown below. What is the project’s Year 1 cash flow?

Sales revenues, each year                                  $62,500

Depreciation                                                     $ 12,000

Other operating costs                                        $25,000

Interest expense                                               $  8,000

Tax rate                                                                35.0%

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Answer #1

Statement showing Cash flow for year 1

Particulars Amount
Sales 62500
Less
Other operating cost 25000
Depreciation 12000
PBT 25500
Tax @ 35% 8925
PAT 16575
Add: Depreciation 12000
Annual cash flow 28575

Thus cash flow for year 1 = $28575

Note: Interest expense should not be consider as it will be considered in discount rate

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