Gong estimates that a new investments incomerevenue from ope

Gong estimates that a new investment’s income/revenue from operations is $80,000. Annual depreciation for the new machine will be $20,000 and the lost depreciation of the old machine is $10,000. The firm would also borrow to buy the new machine, incurring annual interest expense of $5,000. The tax rate is 40 percent. How much is the yearly after tax annual operating cash flow? Also, please show how to entering numbers in financial calculator HP bII+

Solution

Annual operating cash flow =EBIT - Tax + depreciation

              = 60000 -22000+20000

             = 58000