Rieben Corporation Is Considering a Capital Budgeting Project That Would

question 7

Multiple Choice

Rieben Corporation is considering a capital budgeting project that would involve investing $120,000 in equipment with an estimated useful life of 4 years and no salvage value at the end of the useful life. Annual incremental sales from the project would be $320,000 and the annual incremental cash operating expenses would be $220,000. A one-time renovation expense of $40,000 would be required in year 3. The company's income tax rate is 30%. The company uses straight-line depreciation on all equipment.
The income tax expense in year 3 is:

• A)$9,000
• B)$30,000
• C)$12,000
• D)$21,000

---

Definitions:

Unfair Die

A dice that has been modified or weighted in some way to favor certain outcomes over others.

Rolled

Commonly refers to the action of moving or shaping something into a cylindrical or spherical form.

Car Accidents

Unplanned and unfortunate events involving vehicles on the road that result in damage, injury, or loss of life.

Age Group

A classification of people based on their age, often used in demographics and marketing.