A drill press costs $30,000 and is expected to have a 10 year life. The drill press will be depreciated on a straight-line basis over 10 years to a zero estimated salvage value. This machine is expected to reduce the firm's cash operating costs by $4,500 per year. If the firm is in the 40 percent marginal tax bracket, determine the annual net cash flows generated by the drill press.© BrainMass Inc. brainmass.com June 4, 2020, 12:50 am ad1c9bdddf
You have to compute the taxes on the reduction in operating costs (because ...
The process for determining annual net after tax cash flows is illustrated in excel to give the student a template for future problems as well as responding to the current computations. A classic!