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As a member of Gamma Corporation's financial staff, you must estimate the Year 1 operating net...

As a member of Gamma Corporation's financial staff, you must estimate the Year 1 operating net cash flow for a proposed project with the following data. What is the Year 1 operating cash flow? (show calculation)

EBIT: $10,000

Interest Expense: $1,000

Depreciation: $3,500

Tax Rate: 40%

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Expert Solution

CALCULATION OF THE NET INCOME AFTER TAX
EBIT (Earning before interest and taxes) $                       10,000
Less: Interest expenses $                         1,000
Earning After interest before Taxes (EBT) $                         9,000
Less: Taxation @ 40% $                         3,600
Earning after tax (EAT) $                         5,400
CALCULATION OF THE OPERATING CASH FLOW
Earning after tAxation   $                         5,400
Add: Depreciation Expenses $                         3,500
Operating cash flow $                         8,900
Answer = Year 1 Opearing cash Flow = $                         8,900

jeff jeffy answered 2 years ago
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