You are analyzing a project and have developed the followingestimates. The depreciation is $72,000 a year and the tax rate is35 percent.What is the operating cash flow?Unit Sales2,900$220Price per UnitVariable Costs per Unit $160Fixed Costs$28,500a. $119,775b. $138,275c. $153,075d. $164,775

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales Operating costs (not including depreciation) $ $ 22 million 10 million $ 6 million $ 4 million $ Depreciation Interest expense The company faces a 25% tax rate. What is the project's cash flow for the first year (t = 1)? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Round your answer to the nearest dollar.
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A proposed new project has projected sales of $244,500, costs of $123,100, and depreciation of $15,100. The tax rate is 21%. What is the operating cash flow of this project?
coaches by 750 units per year. What is the amount to use as the annual sales figure when evaluating this project? Why? 3. Calculating Projected Net Income A proposed new investment has projected sales of $635,000. Variable costs are 40 percent of sales, and fixed costs are $168,000; depreciation is $83,000. Prepare a pro forma income statement assuming a tax rate of 23 percent. What is the projected net income? LO 2
Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows: Year Project L Project M 1 5,000,000 20,000,000 2 10,000,000 10,000,000 3 15,000,000 8,000,000 4 20,000,000 6,000,000 What is the regular payback period for each of the projects? What is the discounted payback period for each of the projects? If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake?
Consider a project with inflows of $20,000 and outflows of $13,000. If the tax rate is 33%, and if the cash flow in Year 1 is $6,500, what is the depreciation amount? Select one: a. $5,485 b. $5,387 c. $5,333 d. $5,438 e. $5,529
A proposed new investment has projected sales of $515,000. Variable costs are 41 percent of sales, and fixed costs are $127,000; depreciation is $49,000. Assuming a tax rate of 21 percent, what is the projected net income?
In your first job with TBL Inc. your task is to consider a new project whose data are shown below. What is the project's Year 1 cash flow? The annual operating cash flows of the project can be calculated as follows: OCF = {[Sales - Operating Costs]*(1-Tax Rate)} + (Depreciation * Tax Rate) Sales revenues $225,250 Depreciation $72,602 Other operating costs $92,000 Tax rate 28%
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A proposed project has fixed costs of $35,000 per year. The operating cash flow at 14,000 units is $60,000. a. Ignoring the effect of taxes, what is the degree of operating leverage? b. If units sold rise from 14,000 to 14,400, what will be the increase in operating cash flow? c. What is the new degree of operating leverage?
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You are analyzing a project and have developed the following estimates. The depreciation is $47,900 a year and the tax rate is 21 percent. What is the worst-case operating cash flow? Unit sales Sales price per unit Variable cost per unit Fixed costs -$2,545 $11,145 $88,855 $27,556 O $63,937 Base-Case Lower Bound Upper Bound 9,800 12,800 $34 $24 $ 9,200 11,300 $ 39 $25 $ 9,700 $44 $26 $ 10,200

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