1.Coache Corporation is considering a capital budgeting project that would require an investment of $350,000 in equipment with a 4 year useful life and zero salvage value. The annual incremental sales would be $690,000 and the annual incremental cash operating expenses would be $470,000. In addition, there would be a one-time renovation expense in year 3 of $42,000. The companys income tax rate is 30%. The company uses straight-line depreciation on all equipment.

The total cash flow net of income taxes in year 3 is:

2.

Bonomo Corporation has provided the following information concerning a capital budgeting project:

Tax rate 30 %

Expected life of the project 4

Investment required in equipment $ 78,000

Salvage value of equipment $ 0

Annual sales $ 265,000

Annual cash operating expenses $ 172,250

One-time renovation expense in year 3 $ 27,000

The company uses straight-line depreciation on all equipment.

The income tax expense in year 3 is: