A Company Anticipates Incremental Net Income (I

question 177

Multiple Choice

A company anticipates incremental net income (i.e., incremental taxable income) of $37,000 in year 3 of a project. The company's tax rate is 30% and its after-tax discount rate is 8%.Click here to view Exhibit 14B-1 to determine the appropriate discount factor(s) using table.The present value of this future cash flow is closest to: (Round your final answer to the nearest whole number.)

• A) $11,100
• B) $8,813
• C) $25,900
• D) $20,565

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Definitions:

Depository Institutions

Financial institutions that accept deposits from the public, including banks, savings and loan associations, and credit unions, providing various banking and lending services.

Deposits

Funds placed into banking institutions for safekeeping, which can include savings accounts, checking accounts, and certificates of deposit.

Reserves

Funds or materials set aside for future use or to cover unexpected emergencies; in banking, refers to the amount of money banks are required to hold as a safety measure.

Government Bond

A debt security issued by a government to support government spending, often considered a low-risk investment.