Question

After-Tax Cash Flows For each of the following independent situations, compute the net after-tax cash flow amount by subtracting cash outlays for operating expenses and income taxes from cash revenue. The cash outlay for income taxes is determined by applying the income tax rate to the cash revenue received less the cash and noncash (depreciation) expenses. A B C Cash revenue received $97,000 $457,000 $227,000 Cash operating expenses paid 61,000 322,000 152,000 Depreciation on tax return 19,000 37,000 27,000 Income tax rate 40% 30% 20%

Answer 1

Computation of Net Cash Flows -After Tax :-

Considering Given three Independent Situation as following:

Details	Situation-A	Situation-B	Situation-C
Tax Rates	40%	30%	20%
Cash In Flows
Cash Revenue -Received ( A)	97000	457000	227000
Less :Cashout Flow (B)
1. Operating Expenses	61000	322000	152000
2. Depreciation Expense	19000	37000	27000
Taxable Income ( A-B)	17000	98000	48000
Less : Taxes ( TI * Tax Rate)	6800	29400	9600
Net Income	10200	68600	38400
Add : Depreciation	19000	37000	27000
Net Cash Flow After Tax	29200	105600	65400
Key Notes: Depreciation is added to Net Income, Because it is a Non- Cash expendire.