Mesko Corporation Has Provided the Following Information Concerning a Capital

question 171

Multiple Choice

Mesko Corporation has provided the following information concerning a capital budgeting project: The company's income tax rate is 30% and its after-tax discount rate is 15%. 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 3 is:

• A) $34,000
• B) $62,000
• C) $14,000
• D) $40,000

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Definitions:

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The tendency to favor decisions, impressions, or ideas based on one's own belief system or political ideology rather than on objective evidence.

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