Before income taxes,McFadden Company had revenues of $200,000 and expenses of $75,000 for the year.The expenses include $25,000 of depreciation.The company pays taxes at a 30% rate.What is the company's after-tax cash flow for the year?

Question

Quizplus · Accepted Answer

First, we need to calculate the taxable income by subtracting depreciation from expenses:

$75,000 - $25,000 = $50,000

Then, we need to calculate the income tax:

$50,000 x 30% = $15,000

Now, we can calculate the after-tax cash flow by subtracting the income tax from the revenues:

$200,000 - $75,000 - $15,000 = $110,000

Therefore, the correct answer is D) $112,500, which is the closest to $110,000.

Before Income Taxes,McFadden Company Had Revenues of $200,000 and Expenses