Prudencio Corporation Has Provided the Following Information Concerning a Capital

question 9

Multiple Choice

Prudencio 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 total cash flow net of income taxes in year 2 is:

• A) $61,000
• B) $70,000
• C) $110,000
• D) $89,000

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Definitions:

Basic Earnings Per Share

A measure of a company's profitability calculated by dividing the net income by the average number of common shares outstanding.

Market Measures

Metrics and indices used to assess and compare the performance, risk, and valuation of stocks or securities within the financial market.

Price-Earnings

A ratio used to evaluate a company's stock price relative to its per-share earnings, indicating the value that investors put on a company's earning power.

Dividend Yield

Dividend yield is a financial ratio that indicates how much a company pays out in dividends each year relative to its share price.