A gym owner is considering opening a location on the other side of town. The new facility will cost $1.38 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $541,000 in annual sales. Variable costs are 52 percent of sales, the annual fixed costs are $86,900, and the tax rate is 34 percent. What is the operating cash flow?
A gym owner is considering opening a location on the other side of town. The new facility will cost $1.38 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $541,000 in annual sales. Variable costs are 52 percent of sales, the annual fixed costs are $86,900, and the tax rate is 34 percent. What is the operating cash flow?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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A gym owner is considering opening a location on the other side of town. The new facility will cost $1.38 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $541,000 in annual sales. Variable costs are 52 percent of sales, the annual fixed costs are $86,900, and the tax rate is 34 percent. What is the operating cash flow?
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