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# Project's cash flows

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1) For a capital budgeting proposal, assume this year's cash sales are forcast to be \$220, cash expenses \$130, and depreciation \$80. Assume the firm is in the 30% tax bracket. Is it possible to determine the projects after tax cash flow.

2) A restaurant is considering an expansion. Construction will cost \$90,000 and will be depreciated to zero, using straight line depreciation, over 5 years. Earnings before depreciation are expected to be \$20,000 in each of the next 5 years. The restaurant's tax rate is 34%. What are the projects cash flows. Please expalin calculation if possible.

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1) For a capital budgeting proposal, assume this year's cash sales are forcast to be \$220, cash expenses \$130, and depreciation \$80.
Assume the firm is in the 30% tax bracket. Is it possible to determine the projects after tax cash flow.

Project's after tax cash flow is:

Sales 220
Less Expenses 130
EBDT 90
Less Depreciation 80
Profit before tax 10
Less taxes 3
Profit after taxes 7