Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The owner of a bicycle repair shop forecasts revenues of $184,000 a year. Variable costs will be $56,000, and rental costs for the shop are

The owner of a bicycle repair shop forecasts revenues of $184,000 a year. Variable costs will be $56,000, and rental costs for the shop are $36,000 a year. Depreciation on the repair tools will be $16,000. The tax rate is 35%.

a.

Calculate operating cash flow for the year by using all three methods: (a) adjusted accounting profits; (b) cash inflow/cash outflow analysis; and (c) the depreciation tax shield approach.

Method Operating Cash Flow
Adjusted accounting profits $
Cash inflow/cash outflow analysis
Depreciation tax shield approach

b. Are the above answers equal?

Yes

No

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Public, Health, And Not-for-Profit Organizations

Authors: Steven A. FinklerDaniel L. Smith, Thad D. Calabrese

6th Edition

978-1506396811, 150639681X

More Books

Students also viewed these Finance questions

Question

How do cultures and social communities shape communication?

Answered: 1 week ago