Ask Question
24 March, 06:45

Your firm runs a factory that currently produces only jump ropes. You forecast that you will generate $200,000 in after-tax operating cash flows from jump ropes next year. You are considering expanding to produce pogo sticks as well. If you produce pogo sticks then your projected after-tax operating cash flows from jump ropes will be $160,000 and you will have $50,000 in after-tax operating cash flows from pogo sticks.

What are the incremental cash flows that you should consider for this project?

+1
Answers (1)
  1. 24 March, 08:04
    0
    Incremental cash-flow $10,000

    Explanation:

    The incremental cash flow would be the difference between the cash flow before the expansion and after the expansion.

    $

    After tax cash flow from Jump before the decision 200,000

    After tax cash flow from Jump after the decision 160,000

    loss in cash flow (40,000)

    add After tax cash flow from Pogo 50,000

    Incremental cash-flow 10,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Your firm runs a factory that currently produces only jump ropes. You forecast that you will generate $200,000 in after-tax operating cash ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers