(Appendix 8C)Foucault Corporation has provided the following information concerning a capital budgeting project: The company's income tax rate is 35% and its after-tax discount rate is 12%.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 cash flow net of income taxes in year 3 is:
A)$151, 000
B)$73, 000
C)$31, 000
D)$80, 000

Question

(Appendix 8C)Foucault Corporation has provided the following information concerning a capital budgeting project:  The company's income tax rate is 35% and its after-tax discount rate is 12%.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 cash flow net of income taxes in year 3 is:
A)$151, 000 
B)$73, 000 
C)$31, 000 
D)$80, 000

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value)÷ Useful life
= ($240, 000 - $0)÷ 4 years = $60, 000 per year
 11eaa0c8_96c1_fb83_9cb2_09a63d204d0f_TB2487_00

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