Manjarrez Corporation Has Provided the Following Information Concerning a Capital

question 83

Multiple Choice

Manjarrez 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 6%. 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 2 is:

• A) $109,000
• B) $130,000
• C) $70,000
• D) $21,000

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Definitions:

Compute

To calculate or process using a computer or mathematical operations.

Just-In-Time Manufacturing

A production strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs, producing goods only as needed.

Days' Sales

A financial metric that calculates the average time it takes for a company to turn its accounts receivable into cash.

Raw Materials Inventory

Items and components stored for future use in the production process, not yet modified or incorporated into a finished product.