Carmino Company Is Considering an Investment in Equipment That Is $\begin{array}{lr}\text { Year 1 } & \$30,000 \\\text { Year 2 } & 15,000 \\\text { Year 3 } & 7,500 \\\text { Year 4 } & 3,750\end{array}$

question 70

Multiple Choice

Carmino Company is considering an investment in equipment that is expected to generate an after-tax income of $6,000 for each year of its four-year life. The asset has no salvage value. The firm is in the 40% tax bracket. The net book value (NBV) of the investment at the beginning of each year will be as follows: $\begin{array}{lr}\text { Year 1 } & \$30,000 \\\text { Year 2 } & 15,000 \\\text { Year 3 } & 7,500 \\\text { Year 4 } & 3,750\end{array}$ The projected after-tax cash inflow generated by the asset in Year 3, rounded to nearest hundred dollars, is:

• A) $6,600.
• B) $7,500.
• C) $8,100.
• D) $9,000.
• E) $9,750.

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Definitions:

Gametes

Reproductive cells (sperm in males and eggs in females) that contain half the genetic information of the parent and can unite with another gamete to form a zygote.

Meiosis

A biological process of cell division that reduces the chromosome number by half, creating four haploid cells, each genetically distinct from the parent cell.

Epicotyl

The portion of a seedling stem above the cotyledons, which extends and develops into the first true leaves.

Embryo

An early stage of development in multicellular organisms following fertilization and before fetal stage, showing initial formation of organs and structures.