A Profitable Company Pays $100,000 Wages and Has Depreciation Expense

question 26

Multiple Choice

A profitable company pays $100,000 wages and has depreciation expense of $100,000. The company's income tax rate, t, is 40%. The after-tax cash flows from these two items are calculated as follows:

• A) An after-tax cash outflow of $40,000 for wages, and a cash inflow of $60,000 for depreciation expense.
• B) An after-tax cash outflow of $40,000 for wages, and a cash inflow of $40,000 for depreciation expense.
• C) An after-tax cash outflow of $60,000 for wages, and a cash inflow of $60,000 for depreciation expense.
• D) An after-tax cash outflow of $60,000 for wages, and a cash inflow of $40,000 for depreciation expense.
• E) An after-tax cash outflow of $40,000 for wages, and a cash inflow of $100,000 for depreciation expense.

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Definitions:

Emotions

Complex psychological states that involve physiological arousal, feelings, cognitive processes, and behavioral reactions.

Synaptic Cleft

The tiny gap at a synapse where neurotransmitters are released from one neuron to signal the next neuron.

Enzymatic Breakdown

The process of breaking down complex molecules into simpler ones via the catalytic action of enzymes.

Presynaptic Cells

Neurons that are positioned before the synaptic cleft and are responsible for releasing neurotransmitters into the synapse.