Jim Bo's Currently Has Annual Cash Revenues of $240,000 and Annual

question 23

Multiple Choice

Jim Bo's currently has annual cash revenues of $240,000 and annual operating expenses of $185,000 including $35,000 in depreciation.The firm's marginal tax rate is 40 percent.A new cutting machine can be purchased for $120,000 will increase revenues by $50,000 per year while operating expenses would increase to $205,000, including $42,000 in depreciation.Compute Jim Bo's annual incremental after-tax net cash flows.

• A)$25,000
• B)$20,800
• C)$93,000
• D)$19,000

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Definitions:

HMO

Health Maintenance Organization; a type of health insurance plan that typically requires members to receive healthcare services from a network of designated providers.

CMS-1500s

Standardized forms used in the United States to submit Medicare and Medicaid claims and certain other types of insurance claims by healthcare providers.

Medicare

A government-funded health insurance scheme in the US designed for individuals aged 65 and above, select younger individuals with disabilities, and those suffering from End-Stage Renal Disease.

Full-time Employees

Workers who are considered to be employed on a full-time basis, typically working a minimum number of hours defined by their employer or by laws.