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

question 138

Multiple Choice

(Appendix 8C) Stack Corporation is considering a capital budgeting project that would require investing $80, 000 in equipment with an expected life of 4 years and zero salvage value.Annual incremental sales would be $200, 000 and annual incremental cash operating expenses would be $150, 000.The project would also require a one-time renovation cost of $10, 000 in year 3.The company's income tax rate is 35% and its after-tax discount rate is 7%.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 3 is:

• A)$29, 500
• B)$39, 500
• C)$33, 000
• D)$40, 000

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Definitions:

Diastereotopic

Diastereotopic refers to hydrogen atoms or groups in a molecule that are not identical and are replaced by another atom or group, leading to diastereomers.

Enantiotopic

Refers to atoms or groups in a molecule that are mirror images of each other but not superimposable, often discussed in the context of chirality in organic chemistry.

Chemically Equivalent

Term used to describe atoms or groups in a molecule that have identical chemical environments and exhibit the same chemical behavior.

Diastereotopic

Describes hydrogen atoms or groups attached to the same carbon atom that are not equivalent in the three-dimensional spatial configuration, leading to non-superimposable structures.