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alexgriva [62]
2 years ago
5

Canine Industries anticipates investment in equipment designed to improve the efficiency of its operations. The company anticipa

tes that the investment will generate $10,000 in revenue in addition to producing annual cost savings of $40,000. If the tax rate applicable to the company is 25%, what are the anticipated after-tax cash flows of the investment
Business
1 answer:
pogonyaev2 years ago
5 0

The amount of after-tax cash flows for Company C on its investment is $37,500.

<h3>What is an after-tax income?</h3>

After-tax income is the gains earned by the company in an accounting year that remain after adjusting its income taxes.

Given values:

Revenues: $10,000

Savings: $40,000

Total investment income: $50,000 ($10,000 + $40,000)

Rate of tax: 25%

Computation of after-tax cash flows of an investment project:

\rm\ After-tax \rm\ cash \rm\ flows=\rm\ Total \rm\ investment \rm\ income - (\rm\ Total \rm\ investment \rm\ income \times\ 25\%)\\\rm\ After-tax \rm\ cash \rm\ flows= \$50,000- (\$50,000 \times\ 25\%)\\\rm\ After-tax \rm\ cash \rm\ flows=\$37,500

Therefore, $37,500  is the value of after-tax ash flows being earned from the investment in equipment.

Learn more about the after-tax income in the related link:

brainly.com/question/14310665

#SPJ1

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Answer:

Instructions are listed below

Explanation:

Giving the following information:

Suppose you just bought an annuity with 9 annual payments of $15,400 at the current interest rate of 11 percent per year.

First, we need to determine the final value with the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

Then, we can calculate the present value with the following formula:

PV= FV/(1+i)^n

A)i=11%

FV= {15400*[(1.11^9)-1]}/0.11

FV= $218,125.17

PV= 218,125.17/(1.11^9)= $85,270.53

B) i= 6%

FV= {15400*[(1.06^9)-1]}/0.06

FV= $176,966.27

PV= 176,966.27/(1.06^9)= $104,746.06

C) i= 16%

FV= $269,785.02

PV= $70,940.77

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