A company plans to make a new product that requires new equipment costing $1,600,000. Both the product and equipment have a life of four years. The equipment will be depreciated on a straight-line basis, with no expected salvage value. The annual income statement for the product is given below. Revenues $1,800,000 Less: Cash operating expenses (750,000) Depreciation (600,000) Income before income taxes $450,000 Less: Income taxes (@ 40%) 180,000 $270,000 < Year (1-t)Ra tNC Net income Required: Calculate the annual operating after-tax cash flow by completing the following table. Enter amounts that represent cash outflows as negative numbers. -(1-t)cb CF 1 $ 2 1,080,000 $ 1,080,000 ✓ $ -450,000 $ -450,000 240,000 X $ -240,000 X -870,000 X -870,000 X 3 1,080,000 $ -450,000 ✔ -240,000 X -870,000 X 4 1,080,000 $ -450,000 V -240,000 X -870,000 X aR = Revenue. bc = Cash operating expenses.
A company plans to make a new product that requires new equipment costing $1,600,000. Both the product and equipment have a life of four years. The equipment will be depreciated on a straight-line basis, with no expected salvage value. The annual income statement for the product is given below. Revenues $1,800,000 Less: Cash operating expenses (750,000) Depreciation (600,000) Income before income taxes $450,000 Less: Income taxes (@ 40%) 180,000 $270,000 < Year (1-t)Ra tNC Net income Required: Calculate the annual operating after-tax cash flow by completing the following table. Enter amounts that represent cash outflows as negative numbers. -(1-t)cb CF 1 $ 2 1,080,000 $ 1,080,000 ✓ $ -450,000 $ -450,000 240,000 X $ -240,000 X -870,000 X -870,000 X 3 1,080,000 $ -450,000 ✔ -240,000 X -870,000 X 4 1,080,000 $ -450,000 V -240,000 X -870,000 X aR = Revenue. bc = Cash operating expenses.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:A company plans to make a new product that requires new equipment costing $1,600,000. Both the product and equipment have a life of four years.
The equipment will be depreciated on a straight-line basis, with no expected salvage value. The annual income statement for the product is given
below.
Revenues
$1,800,000
Less: Cash operating expenses
(750,000)
Depreciation
(600,000)
Income before income taxes
$450,000
Less: Income taxes (@ 40%)
180,000
$270,000
<
Year
(1-t)Ra
tNC
Net income
Required:
Calculate the annual operating after-tax cash flow by completing the following table. Enter amounts that represent cash outflows as negative numbers.
-(1-t)cb
CF
1 $
2
1,080,000 $
1,080,000 ✓ $
-450,000 $
-450,000
240,000 X $
-240,000 X
-870,000 X
-870,000 X
3
1,080,000 $
-450,000 ✔
-240,000 X
-870,000 X
4
1,080,000 $
-450,000 V
-240,000 X
-870,000 X
aR
= Revenue.
bc
= Cash operating expenses.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education