A Company Is Considering a New Four-Year Project with an Initial

question 234

Multiple Choice

A company is considering a new four-year project with an initial investment requirement of $72,001. The equipment belongs in a 30% CCA class and will be worthless at the end of the project. Sales
Are estimated at $136,800 with costs of $87,901. The tax rate is 34%. What is the project OCF in the
Second year?

• A) $20,394
• B) $28,506
• C) $30,900
• D) $38,516
• E) $41,406

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Definitions:

Entertainment Tax

A tax imposed on services related to entertainment, such as movie tickets, shows, and sporting events, typically to raise revenue for local or national governments.

Streaming Movies

The process of watching films over the internet without downloading them, provided by various online platforms.

Movie Tickets

Small documents or electronic codes that grant the holder access to view a film in a cinema.

Economic Upturn

A period of economic improvement characterized by higher levels of production, employment, and income.