Chene Corporation has provided the following information concerning a capital budgeting project: The equipment will have a 4 year expected life and zero salvage value. The company's income tax rate is 30%, and the after-tax discount rate is 10%. The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $50,000. 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) $335,914
B) $224,000
C) $169,516
D) $135,914

Question

Chene Corporation has provided the following information concerning a capital budgeting project:  The equipment will have a 4 year expected life and zero salvage value. The company's income tax rate is 30%, and the after-tax discount rate is 10%. The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $50,000. 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) $335,914 
B) $224,000 
C) $169,516 
D) $135,914

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11eacbfc_c811_d44f_8ffe_e7d71e218379_TB7552_00

Chene Corporation Has Provided the Following Information Concerning a Capital