A Firm Is Considering a New Project That Will Generate

question 31

Multiple Choice

A firm is considering a new project that will generate cash revenue of $1,000,000 and cash expenses of $700,000 per year for five years.The equipment necessary for the project will cost $200,000 and will fall under asset class 43 with a CCA rate of 30%.What is the expected free cash flow in the second year of the project if the firm's marginal tax rate is 35%?

• A)$195,000
• B)$162,500
• C)$212,850
• D)$245,000
• E)$161,850

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Definitions:

Perception

The process by which organisms interpret and organize sensory information to produce a meaningful experience of the world.

Motion Sickness

A condition in which the discrepancy between visually perceived movement and the vestibular system's sense of movement causes nausea, dizziness, and other symptoms.

High-Speed Spins

Rapid rotations often related to vehicles or objects, characterized by performing spins at a high velocity.

Semicircular Canals

Structures in the inner ear that are key to the vestibular system, helping to maintain balance and spatial orientation.