Shinabery Corporation Has Provided the Following Information Concerning a Capital

question 146

Multiple Choice

Shinabery 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 9%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. 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)$14,000
• B)$3,500
• C)$7,000
• D)$10,500

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Definitions:

Communication Budget

The financial allocation for all communication and promotional activities within a company, including advertising, public relations, and direct marketing.

Objective-and-task

A method of budget setting in marketing that involves defining specific objectives and then determining the tasks necessary to achieve these objectives.

Director of Marketing

A senior executive responsible for leading and managing marketing strategies, activities, and goals of a company.

Click-through Rate

A metric that measures the number of clicks advertisers receive on their ads per number of impressions.