The cost of an equipment is $48,000 and its useful life is 12 years. Its salvage value is $6,000 and annual benefits are $8,000. The estimates are assumed to be in todays dollars. This equipment is depreciated using straight line method. Determine the cash Flow after taxes for the third year if inflation rate is 10% and tax rate is 25%.

YR

Before tax cash Flow_R$

Before tax cash Flow _A$

Depreciation

Taxable income

Tax amount

After tax cash Flow_A$

After tax cash Flow _R$

3