Company C has a 21 percent marginal tax rate and buys equipment for $ 100,000 during August 2022 (year 1).

Company C has a 21 percent marginal tax rate and buys equipment for $ 100,000 during August 2022 (year 1).

Question:

Company C has a 21 percent marginal tax rate and buys equipment for $ 100,000 during August 2022 (year 1). The bonus depreciation rate is 50%. The equipment is half-financed with debt (half-paid in cash in 2022). Company C can defer payment until year 4 and pay $ 11,500 in interest expense each year (year 1 through year 4).What would be the after-tax cash flow in year 1?

Expert Answer:

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To calculate the after tax cash flow in year 1 for Company C after purchasing the equipment we nee
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