5. Bethlehem corp. borrows $20,000 at 5% and invests in a new machine with a useful life of 5 years. The new Machine generates additional revenues of $10,000/year and additional cost of $2,000/year. The corporation tax rate is 30%. The depreciation on this machine is

a.

8,000

b.

2,000

c.

2,000

d.

4,000

23. The optimal situation for a company is to have the optimal equity and debt ratio as follows:

a.

30% DEBT ABD 70% EQUITY

b.

70% DEBT AND 30% EQUITY

c.

60%DEBT ABD 40% EQUITY

d.

40% DEBT AND 60% EQUITY

6. Bethlehem corp. borrows $20,000 at 5% and invests in a new machine with a useful life of 5 years. The new Machine generates additional revenues of $10,000/year and additional cost of $2,000/year. The corporation tax rate is 30%. The NET ICOME IS

a.

2, 000

b.

2,100

c.

3,000

d.

3,100