Answer:
The denominator (net annual cash flow) = $440,000
Explanation:
The denominator (net annual cash flow)
Particular Amount
Saving in operating cost $460,000
<u>Less:</u><u> Depreciation $360,000</u>
<u>Net additional income $100,000</u>
<u>Income tax on above (20%) $20,000</u>
<u>Savings after tax $80,000</u>
<u>Add:</u><u> Depreciation $360,000</u>
<u>Net annual cash benefit $440,000</u>
The denominator (net annual cash flow) = $440,000