Torben Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment $ 312,000 Expected life of the project 4 Salvage value of equipment $ 0 Annual sales $ 660,000 Annual cash operating expenses (including both variable and fixed expenses) $ 468,000 The company’s income tax rate is 30% and its discount rate is 11%. The company uses straight-line depreciation on all equipment. 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 total after-tax cash flow in year 2 is:
Torben Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment $ 312,000 Expected life of the project 4 Salvage value of equipment $ 0 Annual sales $ 660,000 Annual cash operating expenses (including both variable and fixed expenses) $ 468,000 The company’s income tax rate is 30% and its discount rate is 11%. The company uses straight-line depreciation on all equipment. 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 total after-tax cash flow in year 2 is:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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106.
Torben Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment $ 312,000 Expected life of the project 4 Salvage value of equipment $ 0 Annual sales $ 660,000 Annual cash operating expenses (including both variable and fixed expenses) $ 468,000 The company’s income tax rate is 30% and its discount rate is 11%. The company uses straight-line depreciation on all equipment. 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 total after-tax cash flow in year 2 is:
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