Calculate Operating Cash Flow – FIN370 Lab Solution

FIN/370 Lab Tutorial – Operating Cash Flow

Finance 370 Lab

(Calculate Operating Cash Flow) Assume a new project will generate annual revenue of 2,100,000, cash expenses (fixed and variable) of 1,300,000, while increasing depreciation by 215,000. The firm’s tax rate is 33%. Calculate operating cash flows for the project.

Solution Guide

Step 1: Calculate EBIT with the formula Revenue – Cash Expenses

Step 2: Find taxes paid using the formula EBIT x Tax Rate

Step 3: Find Net Income using the formula EBIT – Taxes Paid

Step 4: Find Cash flow by using the formula Net Income + Depreciation

Solution: Cash Flow = 606,950

operating cash flow calculation

 

About this Answer

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