Asked by Matthew Medina on May 30, 2024
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You work for Canada Corp.Inc.,and you must estimate the Year 1 operating cash flow for a project with the following data.What is the Year 1 operating cash flow? Sales revenues $25,000 Capital cost allowance $5,000 Cash operating costs $12,000 Tax rate 40.0%\begin{array}{ll}\text { Sales revenues } & \$ 25,000 \\\text { Capital cost allowance } & \$ 5,000 \\\text { Cash operating costs } & \$ 12,000 \\\text { Tax rate } & 40.0 \%\end{array} Sales revenues Capital cost allowance Cash operating costs Tax rate $25,000$5,000$12,00040.0%
A) $9,800
B) $12,500
C) $17,000
D) $12,000
Operating Cash Flow
The cash generated from the normal operations of a business, reflecting how well the company generates cash to pay its debt obligations and fund its operating expenses.
Sales Revenues
The income received by a company from its sales of goods or the provision of services.
Capital Cost Allowance
Capital cost allowance is a tax deduction available in Canada for depreciable property, allowing businesses to write off the cost of assets over a period of time.
- Utilize cash flow analysis in the valuation of projects, encompassing operating cash flows.
- Conduct an analysis on how taxes affect the revenue streams and market value of projects.
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Learning Objectives
- Utilize cash flow analysis in the valuation of projects, encompassing operating cash flows.
- Conduct an analysis on how taxes affect the revenue streams and market value of projects.
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