Question

Bennett Co. has a potential new project that is expected to generate annual revenues of $266,600, with varlable costs of $146,000, and fixed costs of $62,800. To finance the new project, the company will need to issue new debt that will have an annual interest expense of $27,000. The annual depreciation is $26,200 and the tax rate is 40 percent. What is the annual operating cash flow? а.$45,160b. $84,000 c. $183.416 d.$41.280 e. $131,080

Answer 1

Answer:

a.$45,160

Explanation:

    The answer is attached.      

Answer 2

Answer:

а.$45,160

Explanation:

Bennett Co Annual Operating Cash Flow

Operating Cash Flow =

Annual revenues $266,600

Less: Variable costs ($146,000)

Fixed costs ($62,800)

Balance $57,800

Tax rate[ (1-0.4) × $57,800] $34,680

Add depreciation (40%×$26,200) $10,480

Operating Cash Flow $45,160

Therefore the ANNUAL OPERATING CASH FLOW is $45,160