You Estimate That If a New 4D Computer Graphic Display

question 50

Multiple Choice

You estimate that if a new 4D computer graphic display product is launched by your firm,revenues will increase by $3,053 in the first year and 10% each year for the next 3 years.Expenses will be 50% of revenues.Depreciation is computed using MACRS for an asset with a 3-year life and a basis of $7,236.The tax rate is 40%.Compute the second years' annual cash flows.
MACRS Depreciation Rates

• A) $1,542
• B) $1,881
• C) $2,294
• D) $2,386
• E) $2,974

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