And taxes depreciation net profits before taxes 40

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Unformatted text preview: ing cash inflows aFrom column 1 of Table 8.5. column 2 of Table 8.5. cFrom column 3 of Table 8.6. bFrom 2,110,000 2,230,000 2,250,000 2,120,000 $ 190,000 $ 170,000 $ 150,000 $ 130,000 28,800 c Taxes (rate 1,990,000 $ 210,000 28,800 12,000 0 $ 161,200 $ 158,000 $ 150,000 $ 130,000 72,480 64,480 63,200 60,000 0 $ 0 $ 181,200 52,000 $ 108,720 $ 96,720 $ 94,800 28,800 28,800 $ 137,520 $ 125,520 $ 106,800 $ 12,000 90,000 $ 0 $ 90,000 78,000 78,000 0 0 $ 0 0 $ 0 $ 0 0 0 $ 0 374 PART 3 Long-Term Investment Decisions Interpreting the Term Incremental The final step in estimating the operating cash inflows for a proposed project is to calculate the incremental (relevant) cash inflows. Incremental operating cash inflows are needed, because our concern is only with the change in operating cash inflows that result from the proposed project. EXAMPLE Table 8.9 demonstrates the calculation of Powell Corporation’s incremental (relevant) operating cash inflows for each year. The estimates of operating cash inflows d...
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