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Kellog Corporation is considering a capital budgeting project that would have a useful life of 4 yearsand would involve investing $160,000 in equipment that would
Kellog Corporation is considering a capital budgeting project that would have a useful life of 4 yearsand would involve investing $160,000 in equipment that would have zero salvage value at the end of theproject. Annual incremental sales would be $390,000 and annual cash operating expenses would be$260,000. The company uses straight-line depreciation on all equipment. Its income tax rate is 35%. Howmuch is the income tax expense in year 2?
A). $7,000
B). $24,500
C). $45,500
D). $31,500
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