An investment of $180,000 made now will yield an annual net after-tax cash operating inflow of $24,000 for each of the next ten years. The tax rate is 40%. The annual net before-tax cash operating inflow is:

Question

Quizplus · Accepted Answer

The annual net after-tax cash inflow is $24,000, which is 60% of the before-tax inflow (since 40% is taxed). Therefore, the before-tax inflow is $24,000 / 0.6 = $40,000.

An Investment of $180,000 Made Now Will Yield an Annual