Question

You work for Alpha Inc., and you are estimating the annual operating cash flows for a proposed project with the following data. What is the Operating Cash Flow? (Show Calculation)

Revenue: $20,000

Operating expense: $12,000

Depreciation: $3,000

Interest Expense: $2,000

Tax Rate: 40%

Answer 1

	CALCULATION OF THE NET INCOME AFTER TAX
	Revenue =	$                       20,000
	Less: Opeating Expenses	$                       12,000
	Operating income	$                         8,000
	Less: Interest expenses	$                         2,000
	Net income befor taxes	$                         6,000
	Less: Taxation @ 40%	$                         2,400
	Net profit after tax	$                         3,600
	CALCULATION OF THE OPERATING CASH FLOW
	Net revenue after tax =	$                         3,600
	Add: Depreciation Expenses	$                         3,000
	Operating cash flow	$                         6,600
	Answer = $ 6,600