Sancel Inc

question 9

Multiple Choice

Sancel Inc. is planning a transaction that will generate $70,000 taxable income and cash inflow. The transaction is structured so that Sancel will receive the cash and report the income this year (year 0) . Compute the increase in the NPV of the transaction if it can be restructured so that Sancel will receive the cash this year, but report the income two years later (year 2) . Sancel's marginal tax rate is 30%, and it uses a 10% discount rate to compute NPV.

• A) $3,654
• B) $5,318
• C) $8,526
• D) None of the above

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Definitions:

Operant Conditioning

A learning process in which behavior is influenced by consequences like rewards or punishments.

Aversion Therapy

A form of psychological treatment wherein undesirable behaviors are discouraged through the use of unpleasant stimuli or consequences.

Systematic Desensitization

A therapeutic method used to help individuals overcome phobias and anxiety disorders by gradually exposing them to the feared object or situation in a controlled and hierarchical manner.

Biofeedback

A technique that teaches individuals to control physiological processes such as heart rate or blood pressure by providing real-time feedback.