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A distributor of computer software instruction manuals plans to expand distribution. Annual sales are currently $250000 and are expected to be $290000 one year from today. Assuming that expenses are 80% of sales each year, what is the cash flow one year from today if the tax rate is 34%? Assume straight line depreciation of $25,000. Place your answer to the nearest dollar. Do not include a dollar sign or a comma in your answer. CHECK ANSWER

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Answer #1

Cash flow = (Sales - costs)*(1-Tax) + Tax*Depreciation

= (290000- 80%*290000)*(1-0.34) + 0.34*25000

=$46780

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