Question

Portsmouth Printing Corporation recently purchased a truck for $38,000. Under MACRS, the first year’s depreciation was...

Portsmouth Printing Corporation recently purchased a truck for $38,000. Under MACRS, the first year’s depreciation was $7,600. The truck driver’s salary in the first year of operation was $52,800. The company’s tax rate is 30 percent. Calculate the after-tax cash outflow for the acquisition cost and the salary expense. Calculate the reduced cash outflow for taxes in the first year due to the depreciation.

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