Using the income approach, calculate the after-tax cash flows. $fill in the blank 1 2. Using the decomposition approach, calculate the after-tax cash flows for each item of the income statement and show that the total is the same as the income approach. Enter cash expenses as negative amounts and noncash expenses as positive amounts. Revenue (after tax) $fill in the blank Cash expenses (after tax) fill in the blank Depreciation tax savings fill in the blank Operating cash flow $fill in the blank 3. What if it is desirable
After-Tax
Warren Company plans to open a new repair service center for one of its electronic products. The center requires an investment in
| Revenues | $360,000 |
| Less: Cash operating expenses | (144,000) |
| Depreciation | (107,000) |
| Income before income taxes | $109,000 |
| Less: Income taxes (@40%) | 43,600 |
| Net income | $65,400 |
Required:
1. Using the income approach, calculate the after-tax cash flows.
$fill in the blank 1
2. Using the decomposition approach, calculate the after-tax cash flows for each item of the income statement and show that the total is the same as the income approach. Enter cash expenses as negative amounts and noncash expenses as positive amounts.
| Revenue (after tax) | $fill in the blank |
| Cash expenses (after tax) | fill in the blank |
| Depreciation tax savings | fill in the blank |
| Operating cash flow | $fill in the blank |
3. What if it is desirable to express the decomposition approach in a spreadsheet format for the four years to facilitate the use of spreadsheet software packages? Express the decomposition approach in a spreadsheet format, with a column for each income item and a total column. Enter the after-tax cash expenses as negative amounts. Enter the after-tax revenues and the tax savings from noncash expenses as positive amounts.
| Year | Revenue | Cash operating expenses |
Noncash operating expenses |
Cash flow |
| 1 | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank |
| 2 | fill in the blank | fill in the blank | fill in the blank | fill in the blank |
| 3 | fill in the blank | fill in the blank | fill in the blank | fill in the blank |
| 4 | fill in the blank | fill in the blank | fill in the blank | fill in the blank |
Cash flows means all cash inflows and cash outflows of the business for the particular period of time.
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