The phenol Corporation has an annual cash inflow from operations from its investment in a capital asset of $25,000 each year for five years. The corporation's income tax rate is 40%. Calculate the five years total after-tax cash inflow from operations.

Question

Quizplus · Accepted Answer

The annual cash inflow is $25,000. After-tax cash inflow is $25,000 * (1 - 0.40) = $15,000 per year. Over five years, the total after-tax cash inflow is $15,000 * 5 = $75,000.

The Phenol Corporation Has an Annual Cash Inflow from Operations