Coffie Corporation has provided the following information concerning a capital budgeting project:
The company uses straight-line depreciation on all equipment.
The total cash flow net of income taxes in year 2 is:
A) $90,000
B) $75,000
C) $130,000
D) $103,000

Question

Coffie Corporation has provided the following information concerning a capital budgeting project:
 The company uses straight-line depreciation on all equipment.
The total cash flow net of income taxes in year 2 is:
A) $90,000 
B) $75,000 
C) $130,000 
D) $103,000

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($160,000 - $0) ÷ 4 years = $40,000 per year
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Coffie Corporation Has Provided the Following Information Concerning a Capital