HOW TO SOLVE - Operating Cash Flow

Problem 11-02
Operating Cash Flow

The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service:

Projected sales

$25 million

Operating costs (not including depreciation)

$9 million

Depreciation

$4 million

Interest expense

$3 million

The company faces a 40% tax rate. What is the project's operating cash flow for the first year (t = 1)? Write out your answer completely. For example, 2 million should be entered as 2,000,000