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project which will produce annual sales of $975,000 and increase cash expenses by $848,000. If the project is implemented, taxes will increase from $141,000 to $154,000 and depreciation will increase from $194,000 to $272,000. The company is debt-free. What is the amount of the operating cash flow using the top-down approach?

Respuesta :

Answer:

$114,000

Explanation:

The computation of the operating cash flow is shown below:

= Annual sales - increase cash expenses - (increased taxes - current taxes)

= $975,000 - $848,000 - ($154,000 - $141,000)

= $975,000 - $848,000 - $13,000

= $114,000

While computing the operating cash flow we ignored the depreciation expenses as it is a non - cash expense.

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