A marketing research firm with annual cash inflows of $ 550 does not expect any

Question

A marketing research firm with annual cash inflows of $550 does not expect any growth in annual cash inflows over the next two years. The company, however, anticipates that annual cash outflows, currently at $150 will increase to $220 in year 1 and to $280 in year 2. Assuming the tax rate of 33%, determine the firm's cash flow in YEAR TWO. Assume straight line depreciation of $50 per year.
$ _______________
Place your answer to dollars and cents. Do not include a dollar sign or a comma in your answer.

Explanation / Answer

Cashflow = (Inflow - outflow - depreciation)(1-tax rate) = (550-280-50)(1-33%) = 147.4

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