Northern Railway Is Considering a Project Which Will Produce Annual

question 56

Multiple Choice

Northern Railway is considering a project which will produce annual sales of $975,000 and increase cash expenses by $859,000. If the project is implemented, taxes will increase from $141,000 to $154,000 and depreciation will increase from $194,000 to $272,000. The company is debt-free. What is the amount of the operating cash flow using the top-down approach?

• A)$25,000
• B)$103,000
• C)$157,000
• D)$181,000
• E)$209,000

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Definitions:

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