A store will cost $950,000 to open. Variable costs will be 37% of sales and fixed...
A store will cost $950,000 to open. Variable costs will be 37% of sales and fixed costs are $130,000 per year. The investment costs will be depreciated straight-line over the 8 year life of the store to a salvage value of zero. The opportunity cost of capital is 5% and the tax rate is 35%.
Find the operating cash flow each year if sales revenue is $1,000,000 per year.
Enter your response below.
Homework Answers
operating cash flow = income after tax + depreciation
depreciation = initial investment / depreciable life
depreciation = $950,000 / 8 = $118,750=950
operating cash flow = $366,562.50
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