65 Manning Inc. is contemplating the rental of a special tool for $45,000 per mo

Question

65 Manning Inc. is contemplating the rental of a special tool for $45,000 per month if their tax rate is 40% what is the after-tax monthly cost of renting the tool? a. $27,000 b. $18,000 c $63,000 d. $45,000 66) A company needs an increase in working capital of $50,000 in a project that will last 4 years The company's tax rate is 3096 and its after-tax discount rate is 8%. The present value of the release of the working capital at the end of the project is closest tor A) $36,750 B) S15,000 C) $25,726 D) $35,000 67·Last year the sales at Summit Corporation were $400,000 and were all cash sales. The expenses at Summit were $250,000 and were all cash expenses. The tax rate was 40%. The after tax net cash inflow at Summit last year was: A) $150,000 B) $60,000 C) $90,000 D) $400,000 68. Cridberg Corporation's selling and administrative expenses for last year totaled $260,000. During the year the company's prepaid expense account balance increased by $18,000 and accrued liabilities decreased by $12,000. Depreciation for the year was $25,000. Based on this information, selling and administrative expenses adjusted to a cash basis under the direct method on the statement of cash flows would be: A) $255,000 B) $315,000 C) $205,000 D) $265,000 69. Portia's Salon is contemplating an increase in their rental space that will result in a before-tax rent increase of $14,500 per month. If ter tax rate is 40%, what is the afer-tax monthly increase in rent cost? 5,800 b. $ 8,700 c $20,300 d. $14,500

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

65)

Since Rent expenses are tax deductible, the actual cost will be the after tax amount

So, Cost = Expense x (1 – tax rate)

= $45,000 x (1 – 0.40)

= $45,000 x 0.60

= $ 27,000

So, option a is the correct option

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