Fin 3210 capital budgeting case spring 2014

After taking out all taxes and other depreciation, the operating cash flow in each year would reflect the total cash earned from operations. If a company generates $100,000 annually and has a 25% tax rate, the operating cash flow would then be $75,000 after taxes. If it also had a depreciation expense of $20,000, then the adjusted operating cash flow for year 1 would be $55,000 ($75,000 – $20,000). For each successive year, you can repeat the calculation to determine adjusted operating cash flow years 2-5.