Hello,Please, I need help solving this problem(10.5).Please give me as many details as you can.Thank you, 5. OCF from Several Approaches (LO3) A proposed new project has projectedsales of $164,000, costs of $87,000, and CCA of $15,200. The tax rate is 35%.Calculate operating cash flow using the four different approaches described inthe chapter and verify that the answer is the same in each case.

Operating cash flow (OCF) is a measure of the cash generated or used by a company’s normal business…

Answered: Calculate operating cash flow using the…

Calculate operating cash flow using the four different approaches described in the chapter and verify that the answer is the same in each case.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Hello,

Please, I need help solving this problem(10.5).

Please give me as many details as you can.

Thank you,

5. OCF from Several Approaches (LO3) A proposed new project has projected
sales of $164,000, costs of $87,000, and CCA of $15,200. The tax rate is 35%.
Calculate operating cash flow using the four different approaches described in
the chapter and verify that the answer is the same in each case.

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Step 1: Introduce the concept of operating cash flow.

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Step 2: Specify the information given to us and Calculate Earnings Before Tax (EBT).

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Step 3: 1st. Calculate operating cashflow using the most commonly used (normal) approach.

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Step 4: 2nd. Calculate operating cashflow using the top-down approach.

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Step 5: 3rd. Calculate operating cashflow using the tax-shield approach.

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Step 6: 4th. Calculate operating cashflow using the bottom-up approach.

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Solution

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