ABC Inc is considering purchase of a new equipment The sales

ABC, Inc. is considering purchase of a new equipment. The sales are expected to be $813,685 and the total cash expenses are expected to be $353,312. The annual depreciation is $51,696 and the tax rate is 28.3%. What is the operating cash flow? Enter your answer rounded off to two decimal points.

Solution

Operating Cash Flow = (Sales - Costs - Depreciation) × (1 - tax rate) + Depreciation

Operating Cash Flow = ($813,685 - $353,312 - $51,696) × (1 - 0.283) + $51,696

Operating Cash Flow = $408,677 × (0.717) + $51,696

Operating Cash Flow = $344,717.41