Calculating After-Tax Cash-Flow Streams
With federal, state, and local income taxes combining to take as much as 50% of the profit in a proposal, these taxes will clearly have a noticeable effect on profitability. One way to address income taxes is just to use a before-tax MARR (see Chapter 10). As discussed, using a before-tax MARR will help account for taxes, but the results may not be accurate enough for a particular decision analysis. If more accuracy is needed, the best way to get it is to do the decision analysis using the after-tax MARR (assuming the organization has stated the MARR in after-tax terms) together with the after-tax cash-flow stream. This section explains how to calculate the after-tax cash-flow stream.
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