Question
The MacCauley Company has sales of $250 million and total expenses (excluding depreciation) of $190 million. Straight-line depreciation on the companys assets is $5 million,
The MacCauley Company has sales of $250 million and total expenses (excluding depreciation) of $190 million. Straight-line depreciation on the companys assets is $5 million, and the maximum accelerated depreciation allowed by law is $25 million. Assume that all taxable income is taxed at 40 percent. Assume also that net working capital remains constant. Enter your answers in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
After-tax operating cash flow (straight-line depreciation): $ _________million
After-tax operating cash flow (accelerated depreciation): $ __________million
Calculate the MacCauley Companys after-tax operating cash flow using both straight-line and accelerated depreciation.
Assuming that the company uses straight-line depreciation for book purposes and accelerated depreciation for tax purposes, show the income statement reported to the stockholders.
Revenues | $ ___________ million |
Total operating expenses | $ ___________million |
Depreciation | $ ___________ million |
Operating earnings before tax | $ ___________million |
Tax @ 40% | $ ___________ million |
Operating earnings after tax | $ ___________million |
What is the after-tax operating cash flow under these circumstances?
$ ___________ million
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