You have calculated the pro forma net income for a new project to be $45,870. The incremental taxes are $22,120 and incremental depreciation is $16,180. What is the operating cash flow?
Question
You have calculated the pro forma net income for a new project to be 22,120 and incremental depreciation is $16,180. What is the operating cash flow?
Solution
To calculate the operating cash flow, you need to add back the incremental taxes and the incremental depreciation to the pro forma net income. Here's how you do it:
Step 1: Start with the pro forma net income, which is $45,870.
Step 2: Add the incremental taxes, which are 45,870 + 67,990.
Step 3: Add the incremental depreciation, which is 67,990 + 84,170.
So, the operating cash flow for the new project is $84,170.
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