Brogden Corporation has provided the following information concerning a capital budgeting project:

The company's income tax rate is 30% and its after-tax discount rate is 10%. 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 net present value of the entire project is closest to:
A)$141,583
B)$223,630
C)$381,583
D)$238,000

Question

Brogden Corporation has provided the following information concerning a capital budgeting project:

The company's income tax rate is 30% and its after-tax discount rate is 10%. 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 net present value of the entire project is closest to:
A)$141,583 
B)$223,630 
C)$381,583 
D)$238,000

Quizplus · Accepted Answer

The net present value (NPV) calculation involves discounting future cash flows to the present value and summing them up. Based on the given options, $141,583 is the closest to the calculated NPV.

Brogden Corporation Has Provided the Following Information Concerning a Capital