(Appendix 8C)A Company Anticipates Incremental Net Income (I

question 71

Multiple Choice

(Appendix 8C) A company anticipates incremental net income (i.e. , incremental taxable income) of $50, 000 in year 4 of a project.The company's tax rate is 30% and its after-tax discount rate is 12%.The present value of this future cash flow is closest to:

• A)$22, 260
• B)$35, 000
• C)$9, 533
• D)$15, 000

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, providing limited liability protection to its shareholders and being capable of owning assets, entering contracts, and sue or being sued.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a period, reflecting the efficiency of credit policies and collection efforts.

Financial Information

Data and facts related to the monetary performance and position of an entity, including revenues, expenses, assets, and liabilities.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets.