Supplemental operating cash flows: Supplemental operating cash flows is also called as cash flow from operations. This are cash flows which are generated from the companies operating activities. Calculate the supplemental operating cash flows by using the following formula: Supplemental operating cash flows = Net income + Depreciation CC is considering the purchase of an asset that saves cost of $110,000, cost of assets is $840,000 and life is 10 years.

Question

Want to see the full answer?

Answer 1

Question

Chapter 10, Problem 6PROB

Summary Introduction

Supplemental operating cash flows: Supplemental operating cash flows is also called as cash flow from operations. This are cash flows which are generated from the companies operating activities.

Calculate the supplemental operating cash flows by using the following formula:

Supplemental operating cash flows=Net income+Depreciation

CC is considering the purchase of an asset that saves cost of $110,000, cost of assets is $840,000 and life is 10 years.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Builders Supply, Inc.is considering adding a new product line that is expected to increase annual sales by $367,000 and expenses by $256,000. The project will require $165,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 8-year life of the project. The company has a marginal tax rate of 34 percent. What is the depreciation tax shield?

b. Cendrawasih Inc. is considering replacing the equipment it uses to produce crayons. The equipment would cost RM1.37 million, have a 12-year life, and lower manufacturing costs by an estimated RM304,000 a year. The equipment will be depreciated using straight-line depreciation to a book value of zero. The required rate of return is 15 percent and the tax rate is 35 percent. Determine the net income from this proposed project.

Daily Enterprises is purchasing a $10.0 million machine. It will cost $50,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $4.0 million per year along with incremental costs of $1.2 million per year. If Daily's marginal tax rate is 21%, what are the incremental earnings (net income) associated with the new machine?