Question

The Venoid Corporation has an annual cash inflow from operations from its investment in a capital asset of​ $23,000 (excluding​ depreciation) each year for five years. The​ corporation's income tax rate is​ 30%. Calculate the total afterminustax cash inflow from operations for five years.

Answer 1

$80,500

Step-by-step explanation:

Data provided as per the question

Capital asset = $23,000

Number of year = 5

Income tax rate = 30%

The computation of cash inflow from operations is as shown below:-

Before tax = capital asset × number of year

= $23,000 × 5

= $115,000

Cash inflow from operations = Before tax × (1 - Income tax rate)

= $115,000 × (1 - 0.3)

= $115,000 × 0.7

= $80,500