Answer:
Annual after tax net cash flow = $34000
so correct option is d. $34,000
Explanation:
given data
annual net cash flow = $50,000
annual depreciation expense = $10,000
tax rate = 40%
to find out
what amount of annual after tax net cash flow
solution
we find here Income Tax and here depreciation is non cash expense and t reduced from profits
Income Tax per annual = (Net Cash flows per annual - Depreciation) × Tax Rate ......................1
put here value
Income Tax per annual = ( $50,000 - $10,000 ) × 40%
Income Tax per annual = $16000
and
here Depreciation being a non cash expenditure not considered to arrive annual after tax net cash flow
Annual after tax net cash flow = Annual Net Cash flow before tax - Tax amount ......................2
put here value
Annual after tax net cash flow = $50000 - $16000
Annual after tax net cash flow = $34000
so correct option is d. $34,000
