Kellman Corporation

question 153

Multiple Choice

Kellman Corporation.faces a marginal tax rate of 35 percent.One project that is currently under evaluation has a cash flow in the fourth year of its life that has a present value of $10,000 (after-tax) .Kellman Corporation.assumes that all cash flows occur at the end of the year and the company uses 11 percent as its discount rate.What is the pre-tax amount of the cash flow in year 4? (Round to the nearest dollar.) Present value tables or a financial calculator are required.

• A)$15,181
• B)$23,356
• C)$ 9,868
• D)$43,375

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Definitions:

Escrow Agent

A neutral third party responsible for holding and distributing funds or property until certain conditions are met in a transaction.

Real Property

Land and anything permanently attached to it, such as buildings and fixtures.

Insurable Interest

A legal requirement for obtaining insurance policies, stipulating that the policyholder must stand to suffer a financial or personal loss from the insured event.

Appraisal Clause

A provision in insurance policies allowing for a neutral party to determine the value of property or the extent of damage in case of disagreement.