Explore BrainMass

Explore BrainMass

    Jim Bo's currently has annual cash revenues of $240,000 and annual operating expenses of $185,000 including $35,000 in depreciation. The firm's marginal tax rate is 40 percent. A new cutting machine can be purchased for $120,000 that will increase revenues by $50,000 per year while operating expenses would increase to $205,000, including $42,000 in depreciation. Compute Jim Bo's annual incremental after-tax net cash flows.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Jim Bo's currently has annual cash revenues of $240,000 and annual operating expenses of $185,000 including $35,000 in depreciation. The firm's marginal tax rate is 40 percent. A new cutting machine can be purchased for $120,000 that will increase revenues by $50,000 per year while operating expenses would increase to $205,000, including $42,000 in depreciation. Compute Jim Bo's annual incremental after-tax net cash flows.
    a. $25,000
    b. $20,800
    c. $93,000
    d. $19,000

    © BrainMass Inc. brainmass.com June 3, 2020, 7:52 pm ad1c9bdddf
    https://brainmass.com/business/accounting/115268

    Solution Preview

    Before cash Flow calculation
    Revenue = 240,000
    Operating expenses = 185,000
    Profit before tax = 55,000 (revenue - ...

    Solution Summary

    Step by step computation shown for you.

    $2.19

    ADVERTISEMENT