Correll Corporation is considering a capital budgeting project that would require investing $240,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $570,000 and annual incremental cash operating expenses would be $420,000. The project would also require a one-time renovation cost of $40,000 in year 3. The company's income tax rate is 30% and its after-tax discount rate is 15%. The company uses straight-line depreciation. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.The income tax expense in year 2 is:
A. $27,000
B. $45,000
C. $12,000
D. $15,000
Answer: A
Business
You might also like to view...
For bonds, yield rate is another term for nominal rate
Indicate whether the statement is true or false
Business
Which of the following tables would most likely have a composite key?
a. Take Order. b. Cash c. Ship Product d. Inventory Ship Link
Business
In 1972, computer scientist ________ recognized that digital devices would change the world as they evolved and became widely used.
A. Sam Flynn B. Gordon Moore C. Gordon Bell D. Jakob Nielsen E. Robert Metcalfe
Business
All of the following are elements of mindfulness EXCEPT ______.
A. creation of new categories B. data analysis C. openness to different points of view D. welcoming new information
Business