As assistant to the cfo of boulder inc., you must estimate the year 1 cash flow for a project with the following data. what is the year 1 cash flow? sales revenues $13,000depreciation $4,000other operating costs $6,000tax rate 35.0%a. $5,950b. $6,099c. $6,251d. $6,407e. $6,568

a. $5,950

Explanation:

operating income = sale - operating costs - depreciation

                             = $13,000 - $6,000 - $4,000

                             = $3000

cash flow for year 1 = operating income - tax + depreciation

                                = 3000 - 3000*35% + 4000

                                = 3000 - 1050 + 4000

                                = $5950

Therefore, The project's Year 1 cash flow is $5950.

a. $5,950

Explanation:

To determine aftertax cashflow for this company in year 1, use the following formula;

First find Net Income;

Net Income(NI) = (Revenues - Depreciation - Other operating costs)* (1-tax)

NI = (13,000 - 4,000 - 6,000) (1-0.35)

NI = 3,000*0.65

NI = $1,950

Next, add back Depreciation since it is not an actual cash outflow;

After tax cashflow(Yr1) = Net income + Depreciation

= $1,950 + $4,000

= $5,950