Chapter 16. Income Taxes and After-Tax Cash-Flow Streams

The popular saying is that “nothing in life is certain except death and taxes.” This may very well be true, so we best learn to deal with taxes in a business-decision analysis because they can have a dramatic effect on profitability. The amounts and timing for most taxes are known ahead of time, so they can be handled by simply including them as expense cash-flow instances in a proposal's cash-flow stream. However, income taxes are another matter because you can't know how much income tax needs to be paid until you know how much profit there is. This chapter introduces income taxes and explains how to calculate an after-tax cash-flow stream so that income taxes can be accurately accounted ...

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