Relevant Cash Flow Data for Year 2: Sales revenues Year 2 $100,000 Cost of Goods Sold 20,000 Depreciation Expense 10,000 Tax Rate 40% Based on the above cash flow data: What is the operating cash flow for year two of this capital budgeting project? A.130,000 B.52,000 C.42,000 D. 78,000

Relevant Cash Flow Data for Year 2: Sales revenues Year 2 $100,000 Cost of Goods Sold 20,000 Depreciation Expense 10,000 Tax Rate 40% Based on the above cash flow data: What is the operating cash flow for year two of this capital budgeting project? A.130,000 B.52,000 C.42,000 D. 78,000

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 8EP

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Relevant Cash Flow Data for Year 2:
Sales revenues Year 2 $100,000
Cost of Goods Sold 20,000
Depreciation Expense 10,000
Tax Rate 40%

Based on the above cash flow data: What is the operating cash flow for year two of this capital budgeting project?

A.130,000

B.52,000

C.42,000

D. 78,000

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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