Pompeii, inc., has sales of $53,500, costs of $24,400, depreciation expense of $2,600, and interest expense of $2,350. if the tax rate is 25 percent, what is the operating cash flow, or ocf?

$23,062.50

Explanation:

The computation of the operating cash flow is shown below:

= EBIT + Depreciation - Income tax expense  + interest expense

where,  

EBIT = Sales - cost of good sold - depreciation expense  - interest expense

= $53,500 - $24,400 - $2,600 - $2,350

= $24,150

And, the income tax expense would be

= (Sales - cost of good sold - depreciation expense  - interest expense) × tax rate

= ($53,500 - $24,400 - $2,600 - $2,350) × 25%

= $24,150 × 25%

= $6,037.50

So, the OCF would be

= $24,150 + $2,600 - $6,037.50 + $2,350

= $23,062.50

A 3 : Pigouvian tax

Explanation:

A Pigovian tax is one that is introduced on companies producing a negative externality in the environment. The tax imposed is the cost of the damage caused by the negative externality.

Pigovian taxes are done in an effort to dissuade companies from producing negative externalities such as pollution by charging them the correct amount for the damage they cause so that it forces them to seek better methods of production that would reduce the externality.