The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: The expected life of the project is 4 years. The income tax rate is 30%. The after-tax discount rate is 9%. The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $70,000. 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.
Use Exhibit 7B-1 to determine the appropriate discount factor(s) using table.
The net present value of the project is closest to:
A) $176,900
B) $182,000
C) $84,770
D) $92,770

Question

The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation:  The expected life of the project is 4 years. The income tax rate is 30%. The after-tax discount rate is 9%. The company uses straight-line depreciation on all equipment and the annual depreciation expense would be $70,000. 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.
Use Exhibit 7B-1 to determine the appropriate discount factor(s) using table.
The net present value of the project is closest to:
A) $176,900 
B) $182,000 
C) $84,770 
D) $92,770

Quizplus · Accepted Answer

11eacbfc_c80d_8e69_8ffe_c7bbdc6562ae_TB7552_00

The Following Information Concerning a Proposed Capital Budgeting Project Has