you obtain the following data for year 1: Revenue = $43, variable cost = $30, depreciation = $3, tax rate = 30%. Calculate the operating cash flow for the project for year 1.

69 0

Get full Expert solution in seconds

$1.97 ONLY

you obtain the following data for year 1: Revenue = $43, variable cost = $30, depreciation = $3, tax rate = 30%. Calculate the operating cash flow for the project for year 1.

A. $13 B. $10 C. $7 D. $16

EXPERT ANSWER

The amount is computed as follows:

= Revenue – variable cost – tax expense

tax expense is computed as follows:

= (Revenue – variable cost – depreciation) x tax rate

= ($ 43 – $ 30 – $ 3) x 30%

= $ 3

So, the amount will be as follows:

= $ 43 – $ 30 – $ 3

= $ 10