Question

After-Tax Cash Flows

Using the data that is shown below - (a) calculate the individual after-tax cash flow effect of each relevant item in each independent situation, and (b) sum the individual after-tax cash flows in each situation to determine the overall net after-tax cash flow.

	A	B	C
Cash revenue received	$110,000	$525,000	$275,000
Cash operating expenses paid	64,000	385,000	165,000
Depreciation on tax return	14,000	32,000	25,000
Income tax rate	30%	25%	20%

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

		A	B	C
(a)	Cash revenue	Answer	Answer	Answer
	Cash operating expenses	Answer	Answer	Answer
	Depreciation expense	Answer	Answer	Answer
(b)	Net after-tax cash flow	Answer	Answer	Answer

Answer 1

	A	B	C
Cash revenue	$ 110,000.00	$ 525,000.00	$ 275,000.00
Cash operating expenses	$    64,000.00	$ 385,000.00	$ 165,000.00
Depreciation expense	$    14,000.00	$    32,000.00	$    25,000.00
Net after-tax cash flow	$    36,400.00	$ 113,000.00	$    93,000.00

Working

		A	B	C
A	Cash revenue received	$ 110,000.00	$ 525,000.00	$ 275,000.00
B	Cash operating expenses paid	$    64,000.00	$ 385,000.00	$ 165,000.00
C	Depreciation on tax return	$    14,000.00	$    32,000.00	$    25,000.00
D=A-B-C	Income before taxes	$    32,000.00	$ 108,000.00	$    85,000.00
E	Income tax rate	30%	25%	20%
F=D x E	Income tax expense	$      9,600.00	$    27,000.00	$    17,000.00
G=D-F	Net income after tax	$    22,400.00	$    81,000.00	$    68,000.00
H	Depreciation on tax return	$    14,000.00	$    32,000.00	$    25,000.00
I=G+H	Net after-tax cash flow	$    36,400.00	$ 113,000.00	$    93,000.00