(Appendix 8C)A company anticipates incremental net income (i.e. , incremental taxable income)of $50, 000 in year 4 of a project.The company's tax rate is 30% and its after-tax discount rate is 12%.The present value of this future cash flow is closest to:
A)$22, 260
B)$35, 000
C)$9, 533
D)$15, 000

Question

Quizplus · Accepted Answer

Income tax expense = 0.30 × $50, 000 = $15, 000
After-tax net cash inflow = $50, 000 - $15, 000 = $35, 000
Present value = 0.636 × $35, 000 = $22, 260

(Appendix 8C)A Company Anticipates Incremental Net Income (I