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

question 87

Multiple Choice

(Appendix 8C) Credit 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 15%.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 2 is:

• A)$15, 000
• B)$6, 000
• C)$9, 000
• D)$21, 000

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Definitions:

Precertification

The process of obtaining authorization from a health insurance company before receiving medical services to ensure coverage.

Preauthorization (Predetermination)

The process where a healthcare provider must obtain approval from a health insurance company before providing specific services to ensure coverage.

Indemnity-Type Plan

A type of health insurance plan that allows policyholders to direct their own healthcare and visit almost any doctor or hospital they like.

HMO

Health Maintenance Organization, a type of health insurance plan that limits coverage to care from doctors who work for or contract with the HMO.