6. A company that analyses projects based on after tax cash flows is considering investing in a project. Accepting this project will cause an increase in the company's expected level of income tax payable. This additional amount of tax:

	A must be taken into account when analysing the project as an additional cash outflow
	B must be taken into account when analysing the project as an additional cash inflow
	C only affects accounting profits and not cash flows which means it will not affect the capital budgeting decision
	D only affects cash flows and not accounting profits which means it will not affect the capital budgeting decision

7. You are the finance manager for your company. You and your team have been analysing two mutually exclusive projects. The first project initially costs $1,000 and will return cash flows of $200 per year for the next six years. The second project initially costs $1,500 and will return $600 per year for the next three years.

The method that would not be correct when comparing these two projects is:

A	Calculate the net present value of each project over a six year period (by running the second project twice) and select the project with the highest net present value.
B	Calculate the net present value of each project if each project was repeated an infinite number of times and select the project with the highest net present value.
C	Calculate the net present value of each project for their lifetimes and select the project with the highest net present value.
D	Calculate the Equivalent Annual Annuity (EAA) of each project to find the annual annuity payment that has the same net present value as each project and select the project with the highest annuity payment.