Question

Company L sold an inventory Item to Firm M for $40,000. Company Ls marginal tax rate is 21 percent. In each of the following
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Answer #1
Before tax cash flows $10,000
Tax @ 21% -$8,400
After tax cash flows $ 1,600

Note:
Tax calculate on Sale value of $ 40,000 @ 21%, because information is not clear to find out income made out of sale, if cost of sale is inventory of $ 15,700 then tax will be different.

Income will be $ 40,000 - $ 15,700 = $ 24,300.

Then cash out will be $ 24,300*21% = $ 5,103.

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