A company makes an investment of $150,000 with a useful life of 10 years and expects to use this investment to generate $300,000 in sales with $280,000 in incremental operating costs. If the company operates in an environment with a 30% tax rate, what are the expected after-tax cash flows that the company will use to evaluate the capital investment decision? (Points: 10)

$9,500
$10,500
$16,500
$18,500

18,500 is the answer

To calculate the after-tax cash flows, we need to consider the following:

1. Calculate the net operating profit before tax (NOPBT):
NOPBT = Sales - Incremental Operating Costs

NOPBT = $300,000 - $280,000 = $20,000

2. Calculate the tax expense:
Tax Expense = NOPBT * Tax Rate

Tax Expense = $20,000 * 0.30 = $6,000

3. Calculate the after-tax profit (ATP):
ATP = NOPBT - Tax Expense

ATP = $20,000 - $6,000 = $14,000

4. Calculate the after-tax cash flows:
After-Tax Cash Flows = ATP * (1 - Tax Rate)

After-Tax Cash Flows = $14,000 * (1 - 0.30) = $9,800

Therefore, the expected after-tax cash flows that the company will use to evaluate the capital investment decision is $9,800.

Since none of the given answer choices match the calculated amount, the closest option is $9,500.