Inocencio 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 3 is:
A) $57,500
B) $92,500
C) $157,500
D) $110,000

Question

Inocencio 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 3 is:
A) $57,500 
B) $92,500 
C) $157,500 
D) $110,000

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($240,000 - $0) ÷ 4 years = $60,000 per year
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Inocencio Corporation Has Provided the Following Information Concerning a Capital