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Tutorial   27054

A profitable company pays $100,000 wages and has depreciation expense of $100,000. The company's income tax rate is 40%. The after-tax effects on cash...

Question:

A profitable company pays $100,000 wages and has depreciation expense of $100,000. The company's income tax rate is 40%. The after-tax effects on cash flow are a net cash outflow of:

a)      $40,000 for wages and a net cash inflow of $60,000 for depreciation expenses.

b)      $40,000 for wages and a net cash inflow of $40,000 for depreciation expenses.

c)       $60,000 for wages and a net cash inflow of $60,000 for depreciation expenses.

d)      $60,000 for wages and a net cash inflow of $40,000 for depreciation expenses.

e)      $40,000 for wages and a net cash inflow of $100,000 for depreciation expenses.

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