Question
Pios Rubber and Plastics, Inc. currently has annual cash revenues of $310,000 and annual operating expenses of $105,000 to include $45,000 in depreciation. The firms
Pios Rubber and Plastics, Inc. currently has annual cash revenues of $310,000 and annual operating expenses of $105,000 to include $45,000 in depreciation. The firms marginal tax rate is 40 percent. A new extruder can be purchased for $130,000 that will increase revenues by $85,000 per year while operating expenses would increase by $18,000. The investment will increase depreciation by $6,000. Compute Pios annual incremental after-tax net cash Pios Rubber and Plastics, Inc. currently has annual cash revenues of $310,000 and annual operating expenses of $105,000 to include $45,000 in depreciation. The firms marginal tax rate is 40 percent. A new extruder can be purchased for $130,000 that will increase revenues by $85,000 per year while operating expenses would increase by $18,000. The investment will increase depreciation by $6,000. Compute Pios annual incremental after-tax net cash $183,600 $42,600 $61,000 Cannot be determined from the information provided $43,800.
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