Accounting - 1. Determine after tax cash inflow: $1,000,000...

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Determining Cash Flows Expanded info on Chp 12 PowerPoint This problem is a PowerPoint slide for Chapter 12. Following is a three step approach to determining the “net cash after tax inflows” to use in the present value calculation. Hamill’s cash sales for the year are expected to be $1,000,000. Hamill expects to have $330,000 of cash operating expenses (wages, rent, interest, etc.) and $70,000 of depreciation expense. If Hamill’s tax rate is 25%, what are its projected after-tax cash flows?
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Unformatted text preview: 1. Determine after tax cash inflow: $1,000,000 cash sales (1 tax rate)= $1,000,000 (1-.25)=$1,000,000(.75)= $750,000 2. Determine after tax cash outflow: $330,000 cash expenses (1 tax rate)= $330,000 (1-.25)=$330,000(.75)= ($247,500) 3. Determine depreciation tax shield: $70,000 depreciation (tax rate) = $70,000 (.25) = $ 17,500 After tax net cash inflows to use for present value calculation $520,000...
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This note was uploaded on 03/23/2011 for the course ACCOUNTING 2102 taught by Professor Staff during the Spring '11 term at Georgia State University, Atlanta.

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