Question

The managerial accountant at Fort Story Manufacturing plant reported an annual cash inflow from its investment in a capital asset of 30,000 each year for five years. The corporation’s income tax rate is 40%. Compute the five years total after- tax cash inflow from operations

Answer 1

	Calculation of five years total after- tax cash inflow from operations:-
a	Annual cash inflow from its investment in a capital asset	=	$30,000
b	Income Tax rate	=	40%
c	After tax Annual cash inflows (a*(1-b))	=	$18,000
d	No. of years	=	5
e	Five years total after- tax cash inflow from operations (c*d)	=	$90,000

Feel free to ask any clarification, if required. Kindly provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.