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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