a) What is the Before Tax Cash Flow? b) What is the After Tax Cash Flow? Given:
ID: 2656192 • Letter: A
Question
a) What is the Before Tax Cash Flow?
b) What is the After Tax Cash Flow?
Given: Annual Debt Service $20,876
Vacancy & Collection Loss 6%
Depreciation 10,000
PGI 46,200
Interest 1,701
Operating Expenses 18,400
Marginal Tax Rate 28%
All numbers are annual
If possible, please use a financial calculator and show me how to solve as I need to learn this concept for this class.
Explanation / Answer
Answer (1) Before Tax Cash Flow :- It is the amount of money that is generated by investment and getting revenues and after that deducting all the expenses and payments related to that investment from that revenue is before tax cash flow . It is the amount that comes without decuting the depreciation , other non cash items and also before deducting the amount of tax. An important figure is analysing by investment . Many times properties that has high value of depreciation may show the tax loses so due to this the analysis through before tax cash flow is needed.
Answer :- (2)
After Tax cash flow :- After tax cash flow is the profit that comes by making any investment and then deducting all the expenses either cash non cash or depreciation and also tax expenses from the revenue comes from that investment. It is simply a measure of the cashflows of the company that is earned after deducting the tax expenses. It is calculated by adding all the non cash expenses to the net income of the company. After tax cash flow is a measurement of the general financial performance of the company
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