The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation:
The expected life of the project is 4 years.The income tax rate is 35%.The after-tax discount rate is 9%.The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $70,000.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 net present value of the project is closest to:
A) $156,610
B) $169,000
C) $75,050
D) $82,130

Question

The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation:
 The expected life of the project is 4 years.The income tax rate is 35%.The after-tax discount rate is 9%.The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $70,000.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 net present value of the project is closest to:
A) $156,610 
B) $169,000 
C) $75,050 
D) $82,130

Quizplus · Accepted Answer

11ea7761_15cd_997b_81a5_d9817d1b4330_TB2580_00

The Following Information Concerning a Proposed Capital Budgeting Project Has