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What is the annual operating cash flow

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Problem - Omnibus Plywood Corporation (OPC) is purchasing new saws for P175,000. Freight costs will be P25,000. These costs will be capitalized and depreciated. There is no investment tax credit. P50,000 of inventory will be needed and P22,500 of trade credit is available. Depreciation for tax purposes is P50,000 per year, and book value is zero at the end of 4 years. OPC expects the new saws to increase annual revenues and cash expenses by P120,000 and P50,000, respectively. OPC's tax rate is 34%. Required: Based on the information given above, what is the annual operating cash flow expected from the new saws?

Reference no: EM133031445

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