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25 April, 11:43

An investment project is expected to generate earnings before taxes (EBT) of $60,000 per year. Annual depreciation from the project is $30,000 and the firm's tax rate is 40 percent. Determine the project's annual net cash flows.

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  1. 25 April, 14:22
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    Net cash flow = $66,000

    Explanation:

    Giving the following information:

    An investment project is expected to generate earnings before taxes (EBT) of $60,000 per year. Annual depreciation from the project is $30,000 and the firm's tax rate is 40 percent.

    Net cash flow = EBT - Tax + Depreciation

    Net cash flow = 60,000 - (60,000*0.4) + 30,000 = $66,000
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Home » Business » An investment project is expected to generate earnings before taxes (EBT) of $60,000 per year. Annual depreciation from the project is $30,000 and the firm's tax rate is 40 percent. Determine the project's annual net cash flows.
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