Which one of the following is a correct method for computing the operating cash flow of a project assuming that the interest expense is equal to zero?
A)EBIT + D
B)EBIT - T
C)NI + D
D)(Sales - Costs) × (1 - D) × (1- T)
E)(Sales - Costs) × (1 - T)

Question

Quizplus · Accepted Answer

Operating Cash Flow (OCF) can be calculated by adding back depreciation (D) to the Net Income (NI), as depreciation is a non-cash expense that reduces taxable income. This method correctly adjusts for the non-cash nature of depreciation while incorporating the effect of taxes on the project's cash flows.

Which One of the Following Is a Correct Method for Computing