A Company Anticipates a Taxable Cash Receipt of $20,000 in Year

question 119

Multiple Choice

A company anticipates a taxable cash receipt of $20,000 in year 3 of a project.The company's tax rate is 30%,and its discount rate is 8%.What is the approximate present value of this future cash flow? (Do not round your intermediate calculations and round the final answer to the nearest whole dollar.)

• A) $4,763.
• B) $6,000.
• C) $11,114.
• D) $14,000.

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Definitions:

Net Advantage To Leasing

An analytical tool used to evaluate the financial benefits of leasing equipment or property versus purchasing it, taking into account all associated costs and savings.

Tax Loss Carryovers

Provisions that allow taxpayers to use a taxable loss in one period to offset taxable income in future periods.

Depreciation Tax Shield

The reduction in income tax expense realized from the ability to deduct depreciation expenses, thus lowering taxable income.

Marginal Tax Rates

The rate of tax applied to the next dollar of taxable income, which varies depending on income level and filing status in a progressive tax system.