The Ambitz Corporation has an annual cash inflow from operations from its investment in a capital asset of $35,000 each year for four years.The corporation's income tax rate is 40%.Calculate the total after-tax cash inflow from operations for four years.
A) $ 140,000
B) $ 150,000
C) $ 84,000
D) $35,000

Question

Quizplus · Accepted Answer

To calculate the after-tax cash inflow, we need to multiply the annual cash inflow by (1 - tax rate). So, the after-tax cash inflow for each year would be $21,000 ($35,000 x (1-0.4)). Therefore, the total after-tax cash inflow for four years would be $84,000 ($21,000 x 4). Therefore, the best choice is C.

The Ambitz Corporation Has an Annual Cash Inflow from Operations