Question

After-Tax Cash Flows
For each of the following independent situations, compute the net after-tax cash flow amount by subtracting cash outlays for operating expenses and income taxes from cash revenue. The cash outlay for income taxes is determined by applying the income tax rate to the cash revenue received less the cash and noncash (depreciation) expenses.

	A	B	C
Cash revenue received	$94,000	$454,000	$224,000
Cash operating expenses paid	58,000	319,000	149,000
Depreciation on tax return	16,000	34,000	24,000
Income tax rate	40%	30%	20%

Do not use negative signs with any of your answers below.

	A	B	C
Cash revenue	$Answer	$Answer	$Answer
Cash outlays:
Operating expenses	Answer	Answer	Answer
Income taxes	Answer	Answer	Answer
Total cash outlays	Answer	Answer	Answer
Net after-tax cash flow	$Answer	$Answer	$Answer

Answer 1

• Correct answer with working

Working		A	B	C
A	Cash revenue	$                        94,000	$                     454,000	$              224,000
	Cash outlays:
B	Operating expenses	$                        58,000	$                     319,000	$              149,000
C [see workings below]	Income taxes	$                          8,000	$                        30,300	$                10,200
D = B+C	Total cash outlays	$                        66,000	$                     349,300	$              159,200
E = A - D	Net after-tax cash flow	$                        28,000	$                     104,700	$                64,800

• Working for Income taxes

Working		A	B	C
A	Cash revenue	$                94,000	$              454,000	$                     224,000
B	Operating expenses	$                58,000	$              319,000	$                     149,000
C	Depreciation	$                16,000	$                34,000	$                       24,000
D = A - B - C	Net Income for Income taxes	$                20,000	$              101,000	$                       51,000
E = D x Tax rates	Income taxes at applicable rate	$                   8,000	$                30,300	$                       10,200