Should redundancy payment in incremental cash flow

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Salaries represent the costs of employing two new machine operators at a salary of $40,000 per annum each. For the HCC machine, the company will only need to employ a new machine operator and the second, who earns $70,000 per annum, will be transferred from the axle assembly plant. The second operator from the main plant would otherwise have been made redundant with a redundancy payment of $50,000. Company is subject to 30% corporate tax.

Question 1: Should include the redundancy payment in incremental cash flow? Should removed the 30% tax rate from $50000 redundancy payment?

Reference no: EM132498381

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