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An asset with a first cost of $250,000 and a 5-year recovery period is subject to MACRS depreciation. The gross income in year 1 is $300,000. Operating expenses in year 1 total $70,000. What is the cash flow after taxes in year 1 using an effective tax rate of 40%? Select choice closest to your answer. O a. $230,000 O b. $108,000 O C. $180,000 O d. $120,000

An asset with a first cost of $250,000 and a 5-year recovery period is subject to MACRS depreciation. The gross income in year 1 is $300,000. Operating expenses in year 1 total $70,000. What is the cash flow after taxes in year 1 using an effective tax rate of 40%? Select choice closest to your answer. O a. $230,000 O b. $108,000 O C. $180,000 O d. $120,000

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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**Question:** An asset with a first cost of $250,000 and a 5-year recovery period is subject to MACRS depreciation. The gross income in year 1 is $300,000. Operating expenses in year 1 total $70,000. What is the cash flow after taxes in year 1 using an effective tax rate of 40%? Select the choice closest to your answer. - a. $230,000 - b. $108,000 - c. $180,000 - d. $120,000
Transcribed Image Text:**Question:** An asset with a first cost of $250,000 and a 5-year recovery period is subject to MACRS depreciation. The gross income in year 1 is $300,000. Operating expenses in year 1 total $70,000. What is the cash flow after taxes in year 1 using an effective tax rate of 40%? Select the choice closest to your answer. - a. $230,000 - b. $108,000 - c. $180,000 - d. $120,000
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