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

question 108

Multiple Choice

(Appendix 8C) Foucault Corporation has provided the following information concerning a capital budgeting project: The company's income tax rate is 35% and its after-tax discount rate is 12%.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 net present value of the entire project is closest to:

• A)$403, 202
• B)$282, 160
• C)$163, 202
• D)$286, 000

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Definitions:

Cash Budget

A cash budget is a financial plan that estimates the cash inflows and outflows over a specific period, helping businesses manage their liquidity and financial stability.

Minimum Cash Balance

The least amount of cash a business decides to keep on hand to meet immediate needs, often set as a part of cash management policies.

Cash Excess

Cash excess refers to the situation where a company or individual has more liquid cash available than is necessary for current operations or investments.

Master Budget

A comprehensive financial planning document that includes all of the smaller, individual budgets within an organization, projecting all major financial activities.