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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