Question

A project is expected to generate annual revenues of $140,700,

with variable costs of $86,200, and fixed costs of $19,300. The
annual depreciation is $7,600 and the tax rate is 21 percent. What
is the

Answer 1

The question is about calculating the after-tax profit of a business project. It involves subtracting all costs including variable, fixed, and depreciation from the revenue, and then accounting for taxes to find the final profit.

Step-by-step explanation:

The subject of this question is calculating the after-tax profit of a project in business. The formula to calculate profit in this context is:

1. Subtract the variable costs and fixed costs from the annual revenues to get operating income.
2. Subtract depreciation from the operating income to get taxable income.
3. Calculate taxes by multiplying the taxable income by the tax rate.
4. Subtract taxes from taxable income to get the after-tax profit.

For this specific example:

• Operating income = $140,700 - $86,200 - $19,300
• Taxable income = Operating income - $7,600 (Depreciation)
• Taxes = Taxable income x 21%
• After-tax profit = Taxable income - Taxes

The computation shows the profitability after accounting for all costs and taxes, which helps determine the financial viability of the project.