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A company is deciding whether to launch a new product or not. The research and development cost incurred by the company for this new product is RO.30,000. The research suggests that the revenue of the company will increase by RO.25,000 per year for next 5 years. However, the new product will have additional operating expenses of RO.9,000 per year as well. If the corporation tax rate is 12%, what will be the net relevant cash flows for the first year of operations, if the product is launched? a. RO.(8,000) Negative b. None of the option c. RO.14,080 d. RO.15,080

A company is deciding whether to launch a new product or not. The research and development cost incurred by the company for this new product is RO.30,000. The research suggests that the revenue of the company will increase by RO.25,000 per year for next 5 years. However, the new product will have additional operating expenses of RO.9,000 per year as well. If the corporation tax rate is 12%, what will be the net relevant cash flows for the first year of operations, if the product is launched? a. RO.(8,000) Negative b. None of the option c. RO.14,080 d. RO.15,080

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company is deciding whether to launch a new product or not. The research and development cost incurred by the company for this new product is RO.30,000. The research suggests that the revenue of the company will increase by RO.25,000 per year for next 5 years. However, the new product will have additional operating expenses of RO.9,000 per year as well. If the corporation tax rate is 12%, what will be the net relevant cash flows for the first year of operations, if the product is launched?
a.
RO.(8,000) Negative
b.
None of the option
c.
RO.14,080
d.
RO.15,080
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