(Appendix 8C)Kostka Corporation Is Considering a Capital Budgeting Project That

question 113

Multiple Choice

(Appendix 8C) Kostka Corporation is considering a capital budgeting project that would require investing $160, 000 in equipment with an expected life of 4 years and zero salvage value.Annual incremental sales would be $480, 000 and annual incremental cash operating expenses would be $330, 000.The project would also require an immediate investment in working capital of $20, 000 which would be released for use elsewhere at the end of the project.The project would also require a one-time renovation cost of $0 in year 3.The company's income tax rate is 30% and its after-tax discount rate is 9%.The company uses straight-line depreciation.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 total cash flow net of income taxes in year 2 is:

• A)$110, 000
• B)$117, 000
• C)$150, 000
• D)$33, 000

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Definitions:

Patriarchal Culture

A societal structure in which men hold primary power and predominate in roles of political leadership, moral authority, social privilege, and control of property.

Symbolic Interactionism

A sociological perspective focusing on the symbolic meanings that people create and attach to behaviors, objects, and people, and how they use these meanings in their interactions.

Full-time Work

Employment in which individuals typically work a standard number of hours weekly, often considered to be 35-40 hours.

Emphasized Femininity

A concept referring to socially constructed ideals of female behavior that emphasize compliance, nurturing, and accommodating the interests and desires of men.