Lennox Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment$80,000 Expected life of the project 4 Salvage value of equipment$0 Annual sales$200,000 Annual cash operating expenses$150,000 One-time renovation expense in year 3$20,000 The company's tax rate is 30%. The company's after-tax discount rate is 8%. The project would require an investment of $20,000 at the beginning of the project. This working capital would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment.The total cash flow of income in year 2 is:
A. $50,000
B. $41,000
C. $30,000
D. $26,000
Answer: B
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