A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS...
A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS depreciation schedule as a 7-year property. The operating income in year 2 was $200,000 and the expenses were $87,000. If the company is in the 40% income tax bracket, determine the after-tax cash flow in year 2
The income tax in year 2 is equal to __________________.
Homework Answers
Operating income =$200,000
Less: expenses =87,000
Depreciation = 100,000*24.49% =$24,490
Income =$88,510
Tax @40% =$35,404
Income after tax =$53,106
Add: depreciation (non cash expense) = 24,490
After tax cash flow in year 2 = $77,596
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