During 2018, Raines Umbrella Corp. had sales of $763,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $462,000, $103,000, and $148,500, respectively. In addition, the company had an interest expense of $73,800 and a tax rate of 22 percent. (Ignore any tax loss carryforward provisions and assume interest expense is fully tax deductible.) a. What is the company’s net income/loss for 2018? (Do not round intermediate calculations. Enter your answer as a positive value.)
b. What is the company's operating cash flow? (Do not round intermediate calculations.)

Answer and Explanation:

The computation is shown below;

a. The net income or loss for the year 2018 is

Sales $763,000

Less: COGS$462,000

Less: A&S expenses$103,000

Less: Depreciation$148,500

EBIT$49,500

Less: Interest$73,800

Taxable income-$24,300

Less: Taxes(22%)$0

Net income(loss)-$24,300

Net loss = $24,300

b. The operating cash flow is

OCF = EBIT + Depreciation - Taxes

= $49,500 + $148,500 - $0

 = $198,000

Explanation:

Number of bulbs = 20

Success of a bulb lightning properly = 0.92

Success of a bulb not lightning properly = 0.08

We have to find the probability of atmost 3 bulbs not lightning properly -

The random Variable X follows binomial distribution

= 0.929385

Mean and variance of bulbs in a string that are not lightning properly is given by

Mean of binomial distribution or E(X) = n*p = 20*0.08 = 1.6

Variance of binomial distribution or V(X) = n*p*(1-p) = 20*0.08*0.92 = 1.472