Compute the after-tax cash flows of each project

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Reference no: EM13948273

Brandt Gardner, a financial analyst for DBJ, Inc., is evaluating the possibility of investing in two independent projects. One project entails the acquisition of two trenchers for laying cable, and the other is the acquisition of two forklifts for the warehouse. The expected annual operating revenues and expenses follow for each project:

Project A (investment in trenchers):

Revenues	$ 270,000
Cash expenses	(135,000)
Depreciation	(45,000)
Income before income taxes	$ 90,000
Income taxes	36,000
Net income	$ 54,000
Project B (acquisition of two forklifts):
Cash expenses	$90,000
Depreciation	15,000

Required

Compute the after-tax cash flows of each project. The tax rate is 40 percent and includes federal and state assessments.

Reference no: EM13948273

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