a proposed new project has projected sales of $222000, costs of $96500, and deperciation of $26100. The tax rate is 24 percent. Calculate operating cash flow using the four different approaches.

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A proposed new project has projected sales of $222000, costs of $96500, and deperciation of $26100. The tax rate is 24 percent.Calculate operating cash flow using the four different approaches.

(Do not round intermediate calculations.)

A. EBIT+Depreciation-Taxes

B. Top-Down

C. Tax-Shield

D.Bottom-Up

(A) $101,644

(B) $101,644

(C) $101,644

(D) $101,644

Explanation:

A proposed new project has a sales of $222,000

The cost is $96,500

The depreciation is $26,100

The tax rate is 24%

= 24/100

= 0.24

(A) Using the EBIT + Depreciation - Taxes approach, the operating cash flow can be calculated as follows

EBIT= Sales-Cost-Depreciation

= $222,000-$96,500-$26,100

= $99,400

Taxes= EBIT × tax rate

= $99,400 × 0.24

= $23,856

EBIT + Depreciation - Taxes

$99,400+$26,100-$23,856

= $125,500-$23,856

= $101,644

(B) Using the Top down approach, the operating Cash flow can be calculated as follows

Top down= Sales-Cost-Taxes

= $222,000-$96,500-$23,856

= $101,644

(C) Using the tax shield approach, the operating cash flow can be calculated as follows

Tax shield= (sales-cost)×(1-Tax rate)+(depreciation×tax rate)

= ($222,000-$96,500) × (1-0.24) + ($26,100×0.24)

= 125,500×0.76+6,264

= $101,644

(D) Using the bottom up approach, the operating cash flow can be calculated as follows

Bottom up = NI + depreciation

NI=EBIT-Taxes

= $99,400-$23,856

= $75,544

Bottom up=$75,544 + $26,100

= $101,644

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know