Engineering Board Exam Reviewer · Income Taxes and After-Tax Analysis · medium
A project has a before-tax cash flow of P500,000 and depreciation of P200,000. At a 35% tax rate, find the after-tax cash flow.
- P325,000
- P430,000
- P395,000
- P195,000
Answer
C. P395,000
Solution
Taxable income =500,000-200,000=300,000; tax =0.35(300,000)=105,000. ATCF=500,000-105,000=P395,000 (depreciation is not a cash outflow).
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