Littau Inc

question 11

Multiple Choice

Littau Inc. has provided the following data concerning an investment project that has been proposed: The company's tax rate is 30%. For tax purposes, the entire initial investment will be depreciated over 7 years without any reduction for salvage value. The company uses a discount rate of 19%.
-When computing the net present value of the project, what is the after-tax cash flow from the salvage value in the final year?

• A) $0
• B) $3,000
• C) $10,000
• D) $7,000

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