Foucault Corporation Has Provided the Following Information Concerning a Capital

question 128

Multiple Choice

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 total cash flow net of income taxes in year 3 is:

• A)$151,000
• B)$73,000
• C)$31,000
• D)$80,000

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Definitions:

Shareholders

Individuals or entities that own share(s) of stock in a corporation, thus holding a portion of the ownership and rights to profits.

Disadvantages

are the unfavorable or negative aspects of a situation, plan, or condition that may cause difficulties or reduce chances of success.

Life Cycle

The series of changes in the life of an organism, including birth, growth, reproduction, and death; it can also refer to similar stages in the development of products or organizations.

Entrepreneurial Firms

Businesses that seek to innovate in terms of product, service, market, or business model, typically characterized by risk-taking and proactive initiatives.