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Using the above information, answer the following: The companys income tax rate is 30% and its after-tax discount rate is 11%. The company uses straight-line
Using the above information, answer the following:
The companys income tax rate is 30% and its after-tax discount rate is 11%. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.
The total after-tax cash flow in year 2 is:
148,500
-
$180,000
-
148,500
- $105,000
- $81,500
Investment required in equipment Expected life of the project Salvage value of equipment Annual sales Annual cash operating expenses $ 300,000 4 $ 0 $630,000 $ 450,000
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