Table 11.2
Computer Disk Duplicators, Inc. has been considering several capital investment proposals for the year beginning in 2014. For each investment proposal, the relevant cash flows and other relevant financial data are summarized in the table below. In the case of a replacement decision, the total installed cost of the equipment will be partially offset by the sale of existing equipment. The firm is subject to a 40 percent tax rate on ordinary income and on long-term capital gains. The firm's cost of capital is 15 percent.
________________________________________________________ *Not applicable
-For Proposal 1, the annual incremental after-tax cash flow from operations for year 1 is ________. (See Table 11.2)
A) $60,000
B) $255,000
C) $300,000
D) $210,000

Question

Table 11.2
Computer Disk Duplicators, Inc. has been considering several capital investment proposals for the year beginning in 2014. For each investment proposal, the relevant cash flows and other relevant financial data are summarized in the table below. In the case of a replacement decision, the total installed cost of the equipment will be partially offset by the sale of existing equipment. The firm is subject to a 40 percent tax rate on ordinary income and on long-term capital gains. The firm's cost of capital is 15 percent.
________________________________________________________  *Not applicable
-For Proposal 1, the annual incremental after-tax cash flow from operations for year 1 is ________. (See Table 11.2)
A) $60,000 
B) $255,000 
C) $300,000 
D) $210,000

Quizplus · Accepted Answer

The annual incremental after-tax cash flow from operations is calculated by taking the net income and adding back any non-cash expenses such as depreciation. Without the specific details from Table 11.2, the correct answer cannot be directly derived from the provided information. However, based on the question's structure, if D) $210,000 is presented as the correct answer, it suggests that this option was calculated based on the given data in Table 11.2, which would typically involve subtracting expenses and taxes from revenue and adding back non-cash charges to arrive at the after-tax cash flow.

Table 11.2 Computer Disk Duplicators, Inc. Has Been Considering Several Capital Investment