You Obtain the Following Data for Year 1: Revenue =

question 2

Multiple Choice

You obtain the following data for year 1: Revenue = $43; Variable costs = $30; Depreciation = $3; Tax rate = 21 percent. Calculate the operating cash flow for the project for year 1.

• A)$7.80
• B)$10.90
• C)$13.00
• D)$16.10

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Equipment

Tangible property or assets, excluding real estate and vehicles, used in the operation of a business to produce goods or services.

Unearned Revenue

Money received by a company for goods or services yet to be delivered or provided, recorded as a liability.

Liability

An obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services, or other yielding of economic benefits in the future.