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revenues and other operating costs are expected to be constant over the project's 3-year life. what is the project's year 1 cash flow? equipment cost (depreciable basis) $65,000 straight-line depreciation rate 33.333% sales revenues, each year $60,000 operating costs (excl. deprec.) $25,000 tax rate 40.0%

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The project's year 1 cash flow is $29,665.8 as per the given revenue and net income

Operating cash flow is the flow of cash generated from regular operating activities. Operating cash flow could be calculated using a variety of methods, the indirect method adds back non-cash expenses to net income.

We first compute the net income from year 1, which is:

net income = (revenue - cost - depreciation) *(1 - tax rate)

net income = (60,000 - 25,000 - 65,000*33.33%) * (1 - 40%)

net income = 8,001.3

To get operating cash flows, we need to add depreciation back to the net income, i.e.,

operating cash flow = 8,001.3 + 65,000 * 33.33% = 29,665.8

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