Course Content / Chapter 12 / HW12Question 3 Partially correctNot gradedFlag questionAfter-Tax Cash FlowsFor each of the following independent situations, compute the net after-tax cash flow amount by subtractingcash outlays for operating expenses and income taxes from cash revenue. The cash outlay for income taxesis determined by applying the income tax rate to the cash revenue received less the cash and noncash(depreciation) expenses.Cash revenue receivedCash operating expenses paidDepreciation on tax returnIncome tax rateABC$78,000 $398,000 $198,00042,900 258,700 118,80011,700 39,800 19,80030% 40%20%Do not use negative signs with any of your answers below.ABCCash revenue$78,000 $398,000 $198,000Cash outlays:Operating expenses42,900✔258,700 x118,800✓Income taxes7,020 ✓39,80011,880Total cash outlays49,920✓298,500✓130,680Net after-tax cash flow $28,080 $99,500 $67,320✓Check39°FClearSearch

Understanding Key Concepts:Net After-Tax Cash Flow (NATCF): NATCF represents the actual cash…

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Financial Accounting: The Impact on Decision Makers

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ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.12E

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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. Do not use negative signs with any of your answers below.
The formula for calculating an after-tax cash inflow is: Select one: O O O O A. Pre-tax cash inflow / (1 - tax rate) B. Pre-tax cash inflow / (tax rate - 1) C. Pre-tax cash inflow x (1 - tax rate) D. Pre-tax cash inflow x (tax rate - 1) E. None of the above
You are considering the purchase of a new machine for a project. Details of this potential purchase are provided below. • The project life is 3 years The machine costs $240,000 o You will pay cash for half of this at time 0, and will finance the remaining half at 10% APR compounded annually over 3 years. The machine will be depreciated using a 7 year MACRS approach. Annual O&M costs of the machine are $25,000. Annual labor savings (revenues) are $100,000. Salvage Value at the end of year 3 will be $90,000. Working Capital requirement is initially $50,000. Any investment in Working Capital will be recovered at the end of the project. Assume an income tax rate and gains tax rate of 21%. Your MARR is 15%. NOTE: DO THIS PROBLEM AS A CONSTANT YEAR PROBLEM (I.E. YOU DON'T NEED TO ADJUST FOR THE EFFECTS OF INFLATION) Part (a) (a)). Fill in the Income and Cash Flow tables on the next page to find the annual after-tax cash flows. Cells outlined in BOLD are grading checkpoints. These cells are…
Which of the following is an appropriate method of computing free cash fl ow to the fi rm? C . Deduct both after-tax interest payments and capital expenditures from operating cash fl ows.
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One of the basic techniques used in evaluating after-tax operating cash flows is to Select one: a. add cash expenses to net income. b. subtract depreciation from net income. c. add noncash charges to net income. d. subtract retained earnings from net income.
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Which of the following expenses apply to or may be claimed by cash basis taxpayers? a. Depreciation expense b. Amortization of prepayments c. Expenses actually incurred and paid d. All of the above None of the above
Identify the section of the statement of cash flows (a–d) where each of the following items would be reported.a. Operating activitiesb. Financing activitiesc. Investing activitiesd. Schedule of noncash financing and investing Increase in income taxes payable Where does this will be on the cash flow statement ?
Give an example and explanation for each of the following differences between when revenues are recognized and cash flows are received: recognition simultaneous with receipt; recognition prior to receipt; and recognition after receipt.
Which one of these cash flow measures has been reduced by additions to PP&E (Capital Expenditures)
Match each of the following term with the corresponding description. Not all descriptions will be used._____ Operating activities_____ Indirect method_____ Cash equivalent_____ Investing activities_____ Direct method_____ Financing activitiesA. Measures the percent of net income that comes from high-margin products.B. Includes such events as the receipt of dividends and interest on investment assets.C. Includes assets that are very liquid and have original maturities of three months or less.D. The percent of total debt represented by a company's cash account.E. These activities include only purchases made with borrowed funds.F. Where cash flows from operating activities are calculated by converting each revenue and expense item from an accrual to a cash basis.G. This ratio multiplies net income by the average rate of interest the company receives on its investments.H. This ratio uses net income instead of operating cash flow to Analysis a company's ability to finance the cost of its…

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