[Solved] Gilbert Corporation had a gross income of $500,000 in tax year 1, $150,000 in salaries, $30,000 in wages, $20,000 in interest, and $60,000 in depreciation expenses for an asset purchased 3 years ago. Ajax Corporation has a gross income of $500,000 in tax year 1, and $150,000 in salaries, $90,000 in wages, and $20,000 in interest expenses. Apply the current tax rates and determine which of the following statements is correct.

Q.	Gilbert Corporation had a gross income of $500,000 in tax year 1, $150,000 in salaries, $30,000 in wages, $20,000 in interest, and $60,000 in depreciation expenses for an asset purchased 3 years ago. Ajax Corporation has a gross income of $500,000 in tax year 1, and $150,000 in salaries, $90,000 in wages, and $20,000 in interest expenses. Apply the current tax rates and determine which of the following statements is correct.
A.	both corporations will pay the same amount of income taxes in year 1.
B.	both corporations will have the same amount of net cash flows in year 1.
C.	ajax corporation will have a larger net cash flow than gilbert in year 1.
D.	gilbert corporation will have a larger taxable income than ajax corporation in year 1.
Answer» C. ajax corporation will have a larger net cash flow than gilbert in year 1.

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