Ben's Border Café Is Considering a Project Which Will Produce

question 98

Multiple Choice

Ben's Border Café is considering a project which will produce sales of $16,000 and increase cash expenses by $10,000. If the project is implemented,taxes will increase from $23,000 to $24,500 and depreciation will increase from $4,000 to $5,500. What is the amount of the operating cash flow using the top-down approach?

• A) $4,000
• B) $4,500
• C) $6,000
• D) $7,500
• E) $8,500

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Definitions:

Equal Payments

A series of payments that are the same in amount, typically made at regular intervals over a specified period of time.

Focal Date

The date selected for the calculation of equivalent values.

Compounded Annually

Definition: Refers to the calculation and addition of interest to the principal sum of a loan or deposit once every year.

Debt

money that is owed or due to be paid to someone else, often as a result of borrowing funds.