Explore BrainMass

Explore BrainMass

    After Tax Cash Flow

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

    I'm trying to understand how to calculate the After Tax Cash Flow value in the scenario below for each mutually exclusive option. To calculate the Present value or IRR (Internal rate of return) you need to have an after tax cash flow with the Purchase cost in year zero and the Annual cash in each year of the trucks life. The depreciation is straight line At the end of the truck's life it has no salvage value. So, how do I go about calculating the After Tax Cash Flow, NPV, and IRR of each scenario.

    Truck Type Cost Annual profit before interest, Life in Years
    tax, and depreciation
    New $100,000 $40,000 5
    Ultra $160,000 $60,000 5
    Used $30,000 $25,000 2

    Cost of capital = 10%
    Tax Rate = 40%.

    © BrainMass Inc. brainmass.com June 3, 2020, 9:26 pm ad1c9bdddf
    https://brainmass.com/business/capital-budgeting/after-tax-cash-flow-181523

    Solution Summary

    Excel file contains calculation of after tax cash flow.

    $2.19

    ADVERTISEMENT