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    Operating cash flow computation

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    "The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed services:

    Project Sales $18 million
    Operating Costs (not including deprecation) $ 9 million
    Depreciation $ 4 million
    Interest expense $ 3 million

    The company faces a 40% tax rate. What is the project's operating cash flow for the first year (t = 1)?"

    © BrainMass Inc. brainmass.com October 10, 2019, 8:21 am ad1c9bdddf
    https://brainmass.com/business/finance/operating-cash-flow-computation-620661

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    Solution:

    Step 1: Operating income = Sales - Operating costs - Depreciation = $18 million - $9 million - $4 million = $5 ...

    Solution Summary

    "The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed services:

    Project Sales $18 million
    Operating Costs (not including deprecation) $ 9 million
    Depreciation $ 4 million
    Interest expense $ 3 million

    The company faces a 40% tax rate. What is the project's operating cash flow for the first year (t = 1)?"

    $2.19