What is the operating cash flow in year one and year two

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Reference no: EM132754396

A new project creates the following:

  • $300,000 per year in revenue
  • $70,000 of variable cash costs per year (these are not depreciated)
  • $60,000 of iced costs per year
  • 40% tax rate
  • $200,000 in initial equipment costs which will be depreciated using 5-year MACRS

5-year MACRS table

Year Rate

1 20%

2 32%

3 19.20%

4 11.52%

5 11.52%

6 5.76%

Problem 1: What is the Operating Cash Flow in Year 1 and Year 2?

Reference no: EM132754396

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