(Appendix 8C)Glasco Corporation has provided the following information concerning a capital budgeting project: The working capital would be required immediately and would be released for use elsewhere at the end of the project.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 income tax expense in year 2 is:
A)$7, 000
B)$3, 500
C)$10, 500
D)$17, 500

Question

(Appendix 8C)Glasco Corporation has provided the following information concerning a capital budgeting project:  The working capital would be required immediately and would be released for use elsewhere at the end of the project.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 income tax expense in year 2 is:
A)$7, 000 
B)$3, 500 
C)$10, 500 
D)$17, 500

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value)÷ Useful life
= ($80, 000 - $0)÷ 4 years = $20, 000 per year
 11eaa0c8_96bb_e0eb_9cb2_21e699876176_TB2487_00

(Appendix 8C)Glasco Corporation Has Provided the Following Information Concerning a Capital