The following information concerning a proposed capital budgeting project has been provided by Wick Corporation: The expected life of the project is 4 years. The income tax rate is 35%. The after-tax discount rate is 14%. The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $60,000. 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 project is closest to:
A)$101,282
B)$224,850
C)$119,042
D)$266,500

Question

The following information concerning a proposed capital budgeting project has been provided by Wick Corporation:  The expected life of the project is 4 years. The income tax rate is 35%. The after-tax discount rate is 14%. The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $60,000. 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 project is closest to:
A)$101,282 
B)$224,850 
C)$119,042 
D)$266,500

Quizplus · Accepted Answer

The Answer of The following information concerning a proposed capital budgeting project has been provided by Wick Corporation:  The expected life of the project is 4 years. The income tax rate is 35%. The after-tax discount rate is 14%. The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $60,000. 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 project is closest to:
A)$101,282 
B)$224,850 
C)$119,042 
D)$266,500

The Following Information Concerning a Proposed Capital Budgeting Project Has