After Tax Cash Flow Calculation | CFA® Level 1 Exam | Test Prep

After Tax Cash Flow Calculation

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Question

What is the after tax cash flow of the investment?

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Explanations

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A. B. C. D.

D

NI + DEP EXP - PRIN PMT =

35,985 + 13,322 - 6,661 = 42,646

To determine the after-tax cash flow of an investment, we need to consider the pre-tax cash flow and the applicable tax rate. However, since you haven't provided any specific data or context regarding the investment, tax rate, or any other relevant information, it is not possible to calculate the exact after-tax cash flow.

In the absence of specific information, I can provide you with a general explanation of how to calculate the after-tax cash flow based on a hypothetical scenario. Please note that this is a generic example, and the actual calculation may vary depending on the specific details of the investment.

Let's assume we have the following information:

Pre-tax cash flow: $60,000 Tax rate: 30%

To calculate the after-tax cash flow, we need to multiply the pre-tax cash flow by one minus the tax rate:

After-tax cash flow = Pre-tax cash flow × (1 - Tax rate)

In this example:

After-tax cash flow = $60,000 × (1 - 0.30) After-tax cash flow = $60,000 × 0.70 After-tax cash flow = $42,000

Therefore, based on this hypothetical scenario, the after-tax cash flow would be $42,000.

However, please keep in mind that this is just an example and may not reflect the actual calculations or data provided in the exam question you mentioned. To obtain the accurate answer, it is crucial to have access to the specific details provided in the exam question, such as the pre-tax cash flow, tax rate, and any other relevant information.