Question
Nakama Corporation is considering investing in a project that would have a 4 year expected useful life. The company would need to invest $152,000 in
Nakama Corporation is considering investing in a project that would have a 4 year expected useful life. The company would need to invest $152,000 in equipment that will have zero salvage value at the end of the project. Annual incremental sales would be $480,000 and annual cash operating expenses would be $285,000. In year 3 the company would have to incur one-time renovation expenses of $88,000. Working capital in the amount of $10,000 would be required. The working capital would be released for use elsewhere at the end of the project. The company's tax rate is 30%. The company uses straight-line depreciation on all equipment. The income tax expense in year 2: Multiple Choice $47.100 $44,100 $30,900 $20,700
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