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QUESTION 50 Taylor Inc., the company you work for, is considering a new project whose data...

QUESTION 50

  1. Taylor Inc., the company you work for, is considering a new project whose data are shown below. What is the project's Year 1 cash flow?

    Sales revenues, each year

    $62,500
    Depreciation

    $8,000
    Other operating costs

    $25,000
    Interest expense

    $8,000
    Tax rate

    25.0%
    a.

    $28,619
    b.

    $33,213
    c.

    $34,873
    d.

    $31,631
    e.

    $30,125
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Answer #1

The correct answer is option e i.e. $30,125

Sales Revenue $       62,500
Less - Other operating costs $       25,000
Less- Depreciation $         8,000
Cashflow before tax $       29,500
less tax @25% $         7,375
Add- Depreciation $         8,000
Cashflow after tax $       30,125

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