Question

consider a project with an initial investment of $50,000 and a 5 year life. project inflows are $25,000 each year and project outflows are $13,000 each year. depreciation is calculated on a straight line method. if the cash flow in year 1 is $11,300, what is the tax rate?

Answer 1

The method used to compute depreciation is a straight line. If year 1's cash flow is $11,300, the tax rate is 35%.

The tax rate in a tax system is the proportion at which a company or individual is taxed. Statutory, average, marginal, and effective tax rates are just a few of the ways that can be displayed. These rates can also be displayed using the inclusive and exclusive definitions of a tax base.

Depreciation = 50000/5 = 10000

Cash Flow =( Inflows - Outflows - Depreciation) * (1-Tax rate) + Depreciation Cash Flow =  (25000 - 13000 - 10000) * (1 - Tax Rate) + 10000

1- Tax Rate = 1300/(25000 - 13000 - 10000)

Tax rate = 1- (1300/2000) = 35%

To know more about Tax Rates, refer to this link:

https://brainly.com/question/24734294

#SPJ4