Julio Company Purchased a $200,000 Machine That Has a Four-Year

question 77

Multiple Choice

Julio Company purchased a $200,000 machine that has a four-year life and no salvage value. The company uses straight-line depreciation on all asset acquisitions and is subject to a 30% tax rate. The proper cash flow to show in a discounted-cash-flow analysis as occurring at time 0 would be:

• A) $(200,000).
• B) $(140,000).
• C) $(35,000).
• D) $15,000.
• E) $50,000.

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Definitions:

Income

The total money received by a person or company for goods sold, services provided, or from other financial investments.

Other Income

Revenue from non-primary business activities, such as rental income, interest on investments, or royalties.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, ending with net profit or loss.

Bond Investment

The purchase of bonds as a means of generating income or benefiting from appreciation, involving lending money to the issuer in exchange for periodic interest payments and the return of principal at maturity.