CK Corporation Can Invest $100,000 in a Project

question 60

Multiple Choice

CK Corporation can invest $100,000 in a project.After taxes, the project is expected to generate $40,000 of net income the first year and $75,000 of net income the second year.If the company uses a 10 percent discount rate to evaluate projects, what is the project's net cash flow?

• A)$15,000
• B)$1,690
• C)($1,690)
• D)($1,315)

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Definitions:

Applied Fixed Overhead

The portion of fixed overhead costs allocated to individual units of production based on a predetermined rate.

Machine Hours

A measure of the amount of time a machine is in operation, used for allocating costs in manufacturing.

Spending Variance

The difference between the budgeted amount of expense and the actual amount spent.

Standard Rate

A predetermined cost or price used as a benchmark for evaluating the efficiency or effectiveness of operations.