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A cost-cutting project will decrease costs by $64,500 a year. The annual depreciation will be $14,550 and the tax rate is 40 percent. What is the operating cash flow for this project

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Answer:

Net operating cash flow= $44,520

Explanation:

Giving the following information:

A cost-cutting project will decrease costs by $64,500 a year. The annual depreciation will be $14,550 and the tax rate is 40 percent.

We need to calculate the operating cash flow:

Decrease costs= 64,500

Depreciation= (14,550)

Net savings= 49,950

Tax= (49,950*0.4)= (19,980)

Depreciation= 14,550

Net operating cash flow= 44,520

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