The Launceston Corporation has an annual cash inflow from operations from its investment in a capital asset of $11 000 each year for five years.The corporation's income tax rate is 25%.Calculate the five years' total after-tax cash inflow from operations.

Question

Quizplus · Accepted Answer

- First, we need to calculate the total cash inflow over the five years by multiplying the annual cash inflow by the number of years:

$11,000 x 5 = $55,000
    
- Next, we need to calculate the total income tax paid over the five years. Since the income tax rate is 25%, the amount of tax paid each year is:

$11,000 x 0.25 = $2,750
    
- To calculate the after-tax cash inflow for each year, we subtract the tax paid from the annual cash inflow:

$11,000 - $2,750 = $8,250
    
- Finally, we calculate the after-tax cash inflow over the five years by multiplying the after-tax cash inflow for each year by the number of years:

$8,250 x 5 = $41,250
    
Therefore, the correct answer is B.

The Launceston Corporation Has an Annual Cash Inflow from Operations