Benson Industries Is Adding a New Assembly Line Which Will

question 38

Multiple Choice

Benson Industries is adding a new assembly line which will increase annual sales by $980,000 and cash expenses by $535,001. The project will require an initial investment in equipment of $1.2 million. This equipment belongs in a 40% CCA class. The company has a marginal tax rate of 35%. What is the operating cash flow in the first year of the project using the tax shield approach?

• A) $205,250
• B) $289,250
• C) $314,500
• D) $347,500
• E) $373,250

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Definitions:

Blastocyst

A stage of early development in mammals that consists of a spherical cell mass formed by a blastula undergoing implantation.

Placenta

A structure that forms within the uterus during pregnancy, supplying the fetus with nutrients and oxygen while eliminating its waste.

Physiological Components

Physiological Components refer to the various physical and functional parts of an organism or its systems, which contribute to life processes.

Fetus

The developing human from roughly eight weeks after conception until birth, during which significant growth and development occur.