Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate.

Determine the annual estimated net income and net cash inflow.

Accrual Cash Flow

Cash Inflows 320,000 320,000

Cash Outflows (200,000) (200,000)

Depreciation ____________

Income before taxes ____________

Income Tax (30%) ____________ _____________

Annual net income ____________

Annual net cash flow _____________