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Olenka
18 hours ago
10

A nine-year project is expected to generate annual revenues of $137,800, variable costs of $82,600, and fixed costs of $11,000.

The annual depreciation is $23,500 and the tax rate is 34 percent. What is the annual operating cash flow?a. $37,162
b. $14,301
c. $35,052
d. $13,662
e. $36,506
Business
1 answer:
harina [3.5K]18 hours ago
3 0

Answer:

The correct choice is option (a).

Explanation:

Provided data includes:

Annual revenues = $137,800,

variable costs = $82,600

Fixed costs = $11,000

Annual depreciation = $23,500

Tax rate = 34 percent

Annual Income prior to Taxes:

= Annual revenues - Variable costs - Fixed Costs - Depreciation

= $137,800 - $82,600 - $11,000 - $23,500

= $20,700

Net income:

= Annual Income before Taxes × ( 1 - T)

= $20,700 × 0.66

= $13,662

Annual operating cash flow:

= Net income + Depreciation

= $13,662 + $ 23,500

= $37,162

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