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Cirillo Corporation is considering a capital budgeting project that involves investing $660,000 in equipment that would have a useful life of 3 years and zero salvage value. The net annual operating cash inflow, which is the difference between the incremental sales revenue and incremental cash operating expenses, would be $350,000 per year. The company uses straight-line depreciation and the depreciation expense on the equipment would be $220,000 per year. 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 income tax rate is 30%. The after-tax discount rate is 6%. Required: Determine the net present value of the project. Show your work!

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Last year the sales at Summit Corporation were $400,000 and were all cash sales. The expenses at Summit were $250,000 and were all cash expenses. The tax rate was 30%. The after-tax net cash inflow at Summit last year was:


A) $150,000
B) $45,000
C) $105,000
D) $400,000

E) B) and C)
F) C) and D)

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Correll Corporation is considering a capital budgeting project that would require investing $240,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $570,000 and annual incremental cash operating expenses would be $420,000. The project would also require a one-time renovation cost of $40,000 in year 3. The company's income tax rate is 30% and its after-tax discount rate is 15%. The company uses straight-line depreciation. 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 the tables provided. The net present value of the entire project is closest to:


A) $224,000
B) $162,080
C) $92,864
D) $332,864

E) A) and C)
F) None of the above

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Stockinger Corporation has provided the following information concerning a capital budgeting project: Stockinger 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 11%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 cash flow net of income taxes in year 3 is: A) $77,000 B) $80,000 C) $48,000 D) $128,000 The company's income tax rate is 30% and its after-tax discount rate is 11%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 cash flow net of income taxes in year 3 is:


A) $77,000
B) $80,000
C) $48,000
D) $128,000

E) A) and C)
F) A) and D)

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Bedolla Corporation is considering a capital budgeting project that would require investing $160,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $430,000 and annual incremental cash operating expenses would be $310,000. The company's income tax rate is 30% and its after-tax discount rate is 8%. The company uses straight-line depreciation. 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 cash flow net of income taxes in year 2 is:


A) $80,000
B) $96,000
C) $24,000
D) $120,000

E) None of the above
F) B) and C)

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Marbry Corporation has provided the following information concerning a capital budgeting project: Marbry Corporation has provided the following information concerning a capital budgeting project: 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 income tax expense in year 2 is: A) $6,000 B) $36,000 C) $24,000 D) $19,500 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 income tax expense in year 2 is:


A) $6,000
B) $36,000
C) $24,000
D) $19,500

E) All of the above
F) A) and B)

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Waltermire Corporation has provided the following information concerning a capital budgeting project: Waltermire Corporation has provided the following information concerning a capital budgeting project: The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 cash flow net of income taxes in year 2 is: A) $96,000 B) $24,000 C) $120,000 D) $80,000 The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 cash flow net of income taxes in year 2 is:


A) $96,000
B) $24,000
C) $120,000
D) $80,000

E) A) and D)
F) B) and C)

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Halwick Corporation is considering a capital budgeting project that would have a useful life of 4 years and would involve investing $120,000 in equipment that would have zero salvage value at the end of the project. Annual incremental sales would be $360,000 and annual cash operating expenses would be $280,000. The company uses straight-line depreciation on all equipment. Its income tax rate is 30%. The income tax expense in year 2 is:


A) $6,000
B) $9,000
C) $15,000
D) $24,000

E) All of the above
F) B) and D)

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Prudencio Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate 13% Tax rate 30% Expected life of the project 4 Investment required in equipment $ 160,000 Salvage value of equipment $ 0 Annual sales $ 400,000 Annual cash operating expenses $ 290,000 One-time renovation expense in year 3 $ 40,000 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 income tax expense in year 3 is:


A) $21,000
B) $12,000
C) $9,000
D) $33,000

E) A) and C)
F) B) and D)

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Rollans Corporation has provided the following information concerning a capital budgeting project: Rollans Corporation has provided the following information concerning a capital budgeting project: 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 income tax expense in year 2 is: A) $105,000 B) $39,000 C) $180,000 D) $24,000 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 income tax expense in year 2 is:


A) $105,000
B) $39,000
C) $180,000
D) $24,000

E) C) and D)
F) None of the above

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Roemen Corporation is considering a capital budgeting project that would require investing $160,000 in equipment with a 4 year useful life and zero salvage value. Annual incremental sales would be $410,000 and annual incremental cash operating expenses would be $280,000. An investment of $20,000 in working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 company's tax rate is 30% and the after-tax discount rate is 12%. Required: Determine the net present value of the project. Show your work!

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Depreciation expense = (Origin...

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Newfield Corporation has provided the following information concerning a capital budgeting project: Newfield Corporation has provided the following information concerning a capital budgeting project: The company uses straight-line depreciation. The depreciation expense will be $30,000 per year. 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 income tax rate is 30% and the after-tax discount rate is 13%. Required: Determine the net present value of the project. Show your work! The company uses straight-line depreciation. The depreciation expense will be $30,000 per year. 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 income tax rate is 30% and the after-tax discount rate is 13%. Required: Determine the net present value of the project. Show your work!

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Bedolla Corporation is considering a capital budgeting project that would require investing $160,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $430,000 and annual incremental cash operating expenses would be $310,000. The company's income tax rate is 30% and its after-tax discount rate is 8%. The company uses straight-line depreciation. 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 the tables provided. The net present value of the entire project is closest to:


A) $317,952
B) $157,952
C) $237,440
D) $224,000

E) A) and D)
F) None of the above

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Dobrinski Corporation has provided the following information concerning a capital budgeting project: Dobrinski Corporation has provided the following information concerning a capital budgeting project: 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. Use Exhibit 7B-1 to determine the appropriate discount factor(s) using table. The net present value of the project is closest to: A) $144,210 B) $210,000 C) $77,709 D) $59,949 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. Use Exhibit 7B-1 to determine the appropriate discount factor(s) using table. The net present value of the project is closest to:


A) $144,210
B) $210,000
C) $77,709
D) $59,949

E) B) and C)
F) A) and D)

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Lafromboise Corporation has provided the following information concerning a capital budgeting project: Lafromboise Corporation has provided the following information concerning a capital budgeting project: The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 income tax expense in year 2 is: A) $12,000 B) $42,000 C) $30,000 D) $60,000 The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 income tax expense in year 2 is:


A) $12,000
B) $42,000
C) $30,000
D) $60,000

E) B) and D)
F) A) and C)

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Lennox Corporation has provided the following information concerning a capital budgeting project: Lennox Corporation has provided the following information concerning a capital budgeting project: The company's tax rate is 30%. The company's after-tax discount rate is 8%. The project would require an investment of $20,000 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) $30,000 B) $26,000 C) $41,000 D) $50,000 The company's tax rate is 30%. The company's after-tax discount rate is 8%. The project would require an investment of $20,000 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) $30,000
B) $26,000
C) $41,000
D) $50,000

E) A) and B)
F) None of the above

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Marbry Corporation has provided the following information concerning a capital budgeting project: Marbry Corporation has provided the following information concerning a capital budgeting project: 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 income tax expense in year 3 is: A) $36,000 B) $19,500 C) $24,000 D) $6,000 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 income tax expense in year 3 is:


A) $36,000
B) $19,500
C) $24,000
D) $6,000

E) All of the above
F) B) and C)

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Stockinger Corporation has provided the following information concerning a capital budgeting project: Stockinger 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 11%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 cash flow net of income taxes in year 2 is: A) $133,000 B) $160,000 C) $90,000 D) $77,000 The company's income tax rate is 30% and its after-tax discount rate is 11%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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 cash flow net of income taxes in year 2 is:


A) $133,000
B) $160,000
C) $90,000
D) $77,000

E) A) and B)
F) None of the above

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Vanzant Corporation has provided the following information concerning a capital budgeting project: Vanzant Corporation has provided the following information concerning a capital budgeting project: The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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. Use Exhibit 7B-1, to determine the appropriate discount factor(s) using the tables provided. The net present value of the entire project is closest to: A) $149,290 B) $251,440 C) $165,130 D) $231,000 The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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. Use Exhibit 7B-1, to determine the appropriate discount factor(s) using the tables provided. The net present value of the entire project is closest to:


A) $149,290
B) $251,440
C) $165,130
D) $231,000

E) B) and C)
F) A) and D)

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Mester Corporation has provided the following information concerning a capital budgeting project: Mester Corporation has provided the following information concerning a capital budgeting project: 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. Use Exhibit 7B-1 to determine the appropriate discount factor(s) using table. The net present value of the project is closest to: A) $65,640 B) $119,000 C) $171,822 D) $51,822 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. Use Exhibit 7B-1 to determine the appropriate discount factor(s) using table. The net present value of the project is closest to:


A) $65,640
B) $119,000
C) $171,822
D) $51,822

E) A) and B)
F) None of the above

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