Clemson Software Is Considering a New Project Whose Data Are

question 3

Multiple Choice

Clemson Software is considering a new project whose data are shown below.The required equipment has a 3-year tax life,after which it will be worthless.Under the new tax law,the equipment is eligible for 100% bonus depreciation,so it will be fully depreciated at t = 0.Revenues and operating costs are expected to be constant over the project's 3-year life.What is the project's Year 1 cash flow? Do not round the intermediate calculations and round the final answer to the nearest whole number.

• A) $33,040
• B) $32,008
• C) $29,598
• D) $28,222
• E) $26,250

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Definitions:

Lowest Terms

The form of a fraction when the numerator and denominator are reduced to their smallest possible numbers.

Mixed Numbers

A combination of a whole number and a fraction used to represent quantities that are greater than whole numbers but less than the next whole number.

Lowest Terms

The simplest form of a fraction, where the numerator and denominator are reduced to their smallest values without changing the value of the fraction.

Fractions

Numerical quantities that represent a part of a whole, typically written with a numerator divided by a denominator.