Income Taxes and Net Cash Flow

Santa Rita Company has a tax rate of 20 percent on taxable income. It is considering a capital project that will make the following annual contribution to operating income:

Cash revenues	$ 360,000
Cash expenses	(160,000)
Depreciation	(140,000)
Operating income before income taxes	$ 60,000
Income taxes at 20%	(12,000)
Operating income	$ 48,000

1. Determine thenet cash inflowsfor this project in two different ways (as listed below).

	Net Cash Inflows
Receipts and disbursements	$
Income adjustment procedure	$

Are net cash inflows the same under either approach? SelectYesNoItem 3

2. What is the impact of income taxes on net cash inflows? SelectLowersRaisesItem 4the net cash inflows by$