Lasater Corporation has provided the following information concerning a capital budgeting project: The company's tax rate is 35%. The company's after-tax discount rate is 15%. The project would require an investment of $10,000 at the beginning of the project. This working capital would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. The total cash flow net of income taxes in year 2 is:
A)$62,500
B)$36,500
C)$50,000
D)$80,000

Question

Lasater Corporation has provided the following information concerning a capital budgeting project:  The company's tax rate is 35%. The company's after-tax discount rate is 15%. The project would require an investment of $10,000 at the beginning of the project. This working capital would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. The total cash flow net of income taxes in year 2 is:
A)$62,500 
B)$36,500 
C)$50,000 
D)$80,000

Quizplus · Accepted Answer

The Answer of Lasater Corporation has provided the following information concerning a capital budgeting project:  The company's tax rate is 35%. The company's after-tax discount rate is 15%. The project would require an investment of $10,000 at the beginning of the project. This working capital would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. The total cash flow net of income taxes in year 2 is:
A)$62,500 
B)$36,500 
C)$50,000 
D)$80,000

Lasater Corporation Has Provided the Following Information Concerning a Capital