You work for Canada Corp.Inc.,and you must estimate the Year 1 operating cash flow for a project with the following data.What is the Year 1 operating cash flow? Sales revenues $ 25 , 000 Capital cost allowance $ 5 , 000 Cash operating costs $ 12 , 000 Tax rate 40.0 % \begin{array}{ll} ext { Sales revenues } & \$ 25,000 \ ext { Capital cost allowance } & \$ 5,000 \ ext { Cash operating costs } & \$ 12,000 \ ext { Tax rate } & 40.0 \%\end{array} Sales revenues Capital cost allowance Cash operating costs Tax rate $25 , 000 $5 , 000 $12 , 000 40.0% A) $9,800B) $12,500C) $17,000D) $12,000

Question

You work for Canada Corp.Inc.,and you must estimate the Year 1 operating cash flow for a project with the following data.What is the Year 1 operating cash flow?    Sales revenues  $ 25 , 000  Capital cost allowance  $ 5 , 000  Cash operating costs  $ 12 , 000  Tax rate  40.0 % \begin{array}{ll}	ext { Sales revenues }  &  \$ 25,000 \	ext { Capital cost allowance }  &  \$ 5,000 \	ext { Cash operating costs }  &  \$ 12,000 \	ext { Tax rate }  &  40.0 \%\end{array}  Sales revenues   Capital cost allowance   Cash operating costs   Tax rate  ​ $25 , 000 $5 , 000 $12 , 000 40.0% ​ A) $9,800B) $12,500C) $17,000D) $12,000

Vanessa Lahee · Accepted Answer

Final Answer : A, Explanation :  The Year 1 operating cash flow can be calculated as follows: 1. Calculate the taxable income: Sales revenues - Cash operating costs - Capital cost allowance = $25,000 - $12,000 - $5,000 = $8,000.2. Calculate the tax: Taxable income * Tax rate = $8,000 * 40% = $3,200.3. Calculate the operating cash flow: Sales revenues - Cash operating costs - Tax = $25,000 - $12,000 - $3,200 = $9,800.

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