Problem 13-2 Operating Cash Flow The financial staff of Cairn Communications has
ID: 2784678 • Letter: P
Question
Problem 13-2 Operating Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $25 million Operating costs (not including depreciation) 10 million Depreciation 6 million Interest expense 4 million The company faces a 30% tax rate. What is the project's operating cash flow for the first year (t = 1)? Write out your answer completely. For example, 2 million should be entered as 2,000,000. Problem 13-2 Operating Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $25 million Operating costs (not including depreciation) 10 million Depreciation 6 million Interest expense 4 million The company faces a 30% tax rate. What is the project's operating cash flow for the first year (t = 1)? Write out your answer completely. For example, 2 million should be entered as 2,000,000. Problem 13-2 Operating Cash Flow The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: Projected sales $25 million Operating costs (not including depreciation) 10 million Depreciation 6 million Interest expense 4 million The company faces a 30% tax rate. What is the project's operating cash flow for the first year (t = 1)? Write out your answer completely. For example, 2 million should be entered as 2,000,000.Explanation / Answer
Projected sales $25000000
Operating cost ($10000000)
Depreciation ($6000000)
Interest expense ($4000000)
EBT $5000000
Tax rate 30% ($1500000)
Net income $3500000
Operating cash flows = $3500000 + $6000000
= $9500000.