Respuesta :
Answer:
Annual estimated net income is $360,00.
Annual estimated net cash inflow is $216,000.
Explanation:
1. Determine the annual estimated net income
Annual estimated net income = Annual cash inflows - Annual cash outflow
Annual estimated net income = $600,000 - $240,000 = $360,00
2. Determine the annual estimated net cash inflow
Annual Tax = Annual estimated net income × Tax rate
Annual Tax = $360,00 × 40% = $144,000.
Annual estimated net cash inflow = Annual estimated net income - Annual Tax
Annual estimated net cash inflow = $360,00 - $144,000 = $216,000.
Note that depreciation is not considered in the calculation because depreciation not a cash expense.
Answer:
The annual estimated net income is $ 12,000.
The net cash inflow is$ 72,000
Explanation:
To calculate the annual estimated net income you have to perform the following:
Expected Cash Inflows 240,000
Less: Expected Cash Outflows 160,000
Annual Net Cash Inflow 80,000
Less: Depreciation [(600,000 – 0)/10] 60,000
Estimated Income before tax 20,000
Less: Tax @ 40% 8,000(20,000*40%)
Net Income (Income after tax) $ 12,000
Next, having calculated the net income you can go on with the net cash inflow:
Net Income after tax 12,000
Add: Depreciation (non-cash item) 60,000
Annual Net Cash Inflows $72,000
The Depreciation is deducted to avail the tax benefit from the income since depreciation is an allowable expenses. it is deducted from income when calculating the Net Income after tax.
