(Appendix 8C)Voelkel Corporation has provided the following information concerning a capital budgeting project: The company's income tax rate is 30% and its after-tax discount rate is 7%.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 net present value of the entire project is closest to:
A)$246, 440
B)$165, 152
C)$325, 152
D)$224, 000

Question

(Appendix 8C)Voelkel Corporation has provided the following information concerning a capital budgeting project:  The company's income tax rate is 30% and its after-tax discount rate is 7%.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 net present value of the entire project is closest to:
A)$246, 440 
B)$165, 152 
C)$325, 152 
D)$224, 000

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value)÷ Useful life
= ($160, 000 - $0)÷ 4 years = $40, 000 per year
 11eaa0c8_96cb_4a7c_9cb2_db0f33fca87e_TB2487_00

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