(Appendix 8C)Pont Corporation Has Provided the Following Information Concerning a Capital

question 97

Multiple Choice

(Appendix 8C) Pont Corporation has provided the following information concerning a capital budgeting project: The company's income tax rate is 30% and its after-tax discount rate is 10%.The working capital would be required immediately and would be released for use elsewhere at the end of the project.The company uses straight-line depreciation on all equipment.Assume cash flows occur at the end of the year except for the initial investments.The company takes income taxes into account in its capital budgeting. The income tax expense in year 3 is:

• A)$27, 000
• B)$6, 000
• C)$21, 000
• D)$39, 000

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Definitions:

Adaptability

The quality of being able to adjust to new conditions or environments, showing flexibility in coping with changes.

Quality of Life

The general well-being of individuals and societies, outlining the negative and positive aspects of life, including health, comfort, and happiness.

Sense of Taste

One of the five senses, culminating from the ability to perceive and distinguish flavors through the taste buds in the mouth.

Hypertension

A chronic medical condition in which the blood pressure in the arteries is persistently elevated.