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Le Place has sales of $439,000, depreciation of $32,000, and net working capital of $56,000. The firm has a tax rate of 34 percent and a net profit margin of 6 percent. The firm has no interest expense. What is the amount of the operating cash flow?Group of answer choices$54,980$114,340$52,616$58,340$49,384

Question

Le Place has sales of 439,000,depreciationof439,000, depreciation of 32,000, and net working capital of 56,000.Thefirmhasataxrateof34percentandanetprofitmarginof6percent.Thefirmhasnointerestexpense.Whatistheamountoftheoperatingcashflow?Groupofanswerchoices56,000. The firm has a tax rate of 34 percent and a net profit margin of 6 percent. The firm has no interest expense. What is the amount of the operating cash flow?Group of answer choices54,980114,340114,34052,61658,34058,34049,384

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Solution

To calculate the operating cash flow (OCF), we first need to find the net income. We can do this by multiplying the sales by the net profit margin:

439,0006439,000 * 6% = 26,340

Next, we add back the depreciation because it's a non-cash expense:

26,340+26,340 + 32,000 = $58,340

So, the operating cash flow is 58,340.Therefore,thecorrectanswerfromthegivenoptionsis58,340. Therefore, the correct answer from the given options is 58,340.

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