Unique Style Inc

question 53

Multiple Choice

Unique Style Inc.is considering a five-year expansion project that requires an initial investment of $500,000 for the purchase of a new machine with a CCA rate of 30%.The projected sales revenue and related costs are $450,000 and $180,000 per year, respectively.The project's fixed costs are an additional $48,000 per year.The appropriate discount rate is 8%.The firm's marginal tax rate is 40%.What is the after-tax cash flow in year three, assuming accelerated investment incentive is applicable for CCA in year 1?

• A)$156,300
• B)$168,900
• C)$191,400
• D)$197,700

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Definitions:

Lymphatic Structure

Organs and tissues that are part of the lymphatic system, responsible for transporting lymph and protecting the body from infection.

Pancreas

A gland located behind the stomach that produces enzymes for digestion and hormones such as insulin for blood sugar regulation.

Permeable

Allowing liquids or gases to pass through it.

Capillaries

The smallest blood vessels in the body, responsible for the exchange of oxygen, carbon dioxide, and nutrients between blood and tissues.