Question

You are considering the incremental cashflows for project year one. As a result of your new...

You are considering the incremental cashflows for project year one. As a result of your new project, You expect that sales will increase $10000 in year one. Your operating expenses will increase by $3000 as a result of this project. Depreciation of equipment for this project will be $2000 in year one.

You also took out a loan to finance the new machine and you owe a $100 interest payment.  

The applicable tax rate is 25%.  

What is the new after tax income as a result of this project?

Group of answer choices

$5000

$3675

$3550

$5675

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Homework Answers

Answer #1

$3675

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

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