Sharpie Company Will Purchase a Van for $75,000

question 79

Multiple Choice

Sharpie Company will purchase a van for $75,000.The van's depreciable life is 5 years.The van has no terminal salvage value.Assume a tax rate of 30% and a required after-tax rate of return of 12%.The company uses the straight-line method of depreciation for tax purposes.What is the annual after-tax cash flow from depreciation expense?

• A) $4,500 cash outflow
• B) $4,500 cash inflow
• C) $10,500 cash outflow
• D) $10,500 cash inflow

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