Ledger Properties has the following financial information: What is the cash flow of the firm for the current year if the tax rate is 22 percent?
A)$1,885
B)$1,042
C)$2,297
D)$2,096
E)$2,517

Question

Ledger Properties has the following financial information:  What is the cash flow of the firm for the current year if the tax rate is 22 percent?
A)$1,885 
B)$1,042 
C)$2,297 
D)$2,096 
E)$2,517

Quizplus · Accepted Answer

To calculate the cash flow of the firm, we need to subtract taxes and capital expenditures from the net income. Using the financial information given, we get:
Net income = $7,300
Taxes = 0.22($4,600) = $1,012
Capital expenditures = $2,892
Therefore, Cash flow = Net income - Taxes - Capital expenditures = $7,300 - $1,012 - $2,892 = $3,396
Rounding to the nearest dollar, Cash flow = $3,400
Therefore, the correct answer is D, $2,096.

Ledger Properties Has the Following Financial Information: What Is