A Company Anticipates Incremental Net Income (I

question 23

Multiple Choice

A company anticipates incremental net income (i.e., incremental taxable income) of $20,000 in year 3 of a project. The company's tax rate is 30% and its after-tax discount rate is 8%. Use Exhibit 7B-1 to determine the appropriate discount factor(s) using table.
The present value of this future cash flow is closest to:

• A) $6,000
• B) $4,763
• C) $14,000
• D) $11,116

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