Echidna Corporation has an annual cash inflow from operations from its investment in a capital asset of $50 000 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

To calculate the after-tax cash inflow, we need to first calculate the amount of tax paid each year.

Tax paid = Annual cash inflow x Tax rate

Tax paid = $50,000 x 0.4 = $20,000

After-tax cash inflow = Annual cash inflow - Tax paid

After-tax cash inflow = $50,000 - $20,000 = $30,000

Total after-tax cash inflow for 5 years = $30,000 x 5 = $150,000

Therefore, the correct answer is C) $150,000.

Echidna Corporation Has an Annual Cash Inflow from Operations from Its