Portsmouth Printing Corporation recently purchased a truck for $30,000. Under MACRS, the first years depreciation was $6,000. The truck drivers salary in the first year of operation was $40,200. The companys tax rate is 30 percent.

Required:

1a.

Calculate the after-tax cash outflow for the acquisition cost and the salary expense.

After-Tax Cash Outflow

Acquisition cost

Salary expense

1-b.	Calculate the reduced cash outflow for taxes in the first year due to the depreciation. Reduced Cash Outflow