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    xarasia's Avatar
    xarasia Posts: 1, Reputation: 1
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    Apr 25, 2008, 03:38 PM
    Statement of Cash Flows - Operating Activity
    1) On a statement of cash flows which of the following wouldn't be classified as an operating activity?
    A. The purchase of a trading security
    B. The receipt of a cash dividend
    C. The payment of interest on a bond issue
    D. The proceeds from the sale, at a gain, of an available-for-sale security
    ahmari1's Avatar
    ahmari1 Posts: 1, Reputation: 1
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    Apr 26, 2008, 07:11 AM
    McDermott Technologies is evaluating a new project that requires $800,000 in new equipment. McDermott estimates that the new project will generate $900,000 in annual sales at the end of each of the next four years and that total operating costs (variable and fixed costs excluding depreciation) will equal $400,000. Suppose that the firm depreciates the equipment using the straight-line method over four years and the firm's tax rate is 40%. If the project's required return is 10.2%, what is the present value of the annual operating cash flows received over the project's four-year life?
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