You are given the following data for year-1: Revenues = 100, Fixed costs = 30; Total variable costs = 50; Depreciation = $10; Tax rate = 30%. Calculate the after tax cash flow for the project for year-1.
A) $17
B) $7
C) $10
D) None of the above

Question

Quizplus · Accepted Answer

The after-tax cash flow is calculated as: Revenues - Fixed Costs - Variable Costs - Taxes + Depreciation. First, calculate the taxable income: $100 - $30 - $50 - $10 = $10. Taxes are 30% of $10, which is $3. The after-tax cash flow is $10 (taxable income) - $3 (taxes) + $10 (depreciation) = $17.

You Are Given the Following Data for Year-1: Revenues =