Braselton Company plans to incur $190,000 of salaries expense and produce $320,000 of additional sales revenue if a capital project is implemented.Assuming a 30% tax rate,these two items collectively should appear in a capital budgeting analysis as:

Question

Quizplus · Accepted Answer

The $190,000 salaries expense is an outflow and the $320,000 additional sales revenue is an inflow. To calculate the net cash flow, we subtract the outflow from the inflow: $320,000 - $190,000 = $130,000. However, we need to take into account the tax rate of 30%, which means that the net cash flow after taxes is: $130,000 × (1 - 0.30) = $91,000. Therefore, the answer is C, a $91,000 inflow.

Braselton Company Plans to Incur $190,000 of Salaries Expense and Produce