The Moab Corporation had sales of $300,000 and expenses of $175,000 last year. All sales were cash sales and all expenses were cash expenses. Moab Corporation's tax rate is 30%. The after-tax net cash inflow at Moab last year was:
A)$210,000
B)$37,500
C)$52,500
D)$87,500

Question

Quizplus · Accepted Answer

The net cash inflow before tax is $125,000 ($300,000 - $175,000). The tax on this amount is $37,500 (30% of $125,000). Therefore, the after-tax net cash inflow is $87,500 ($125,000 - $37,500).

The Moab Corporation Had Sales of $300,000 and Expenses of $175,000