Prudencio Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate 13...
Prudencio Corporation has provided the following information concerning a capital budgeting project:
After-tax discount rate 13 %
Tax rate 30 %
Expected life of the project 4
Investment required in equipment $ 160,000
Salvage value of equipment $ 0
Annual sales $ 400,000
Annual cash operating expenses $ 290,000
One-time renovation expense in year 3 $ 40,000
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:
Multiple Choice
$12,000
$21,000
$9,000
$33,000
Homework Answers
OPTION: $21000
EXPLANATION:
income tax expense = (annual sales - annual cash operating expenses - depreciation) x 30%
= {$400000 - $290000 - ($160000/4)} x 30%
= $70000 x 30%
= $21000
Add Answer to:
Prudencio Corporation has provided the following information
concerning a capital budgeting project:
After-tax discount rate 13...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables. Investment required in equipment $ 164,000 Salvage value of equipment $ 0 Working capital requirement $ 22,000 Annual sales $ 630,000 Annual cash operating expenses $ 487,000 One-time renovation expense in year 3 $ 50,000 The expected life of the project is 4 years. The income tax rate is 30%. The...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables. Investment required in equipment $ 184,000 Salvage value of equipment $ 0 Working capital requirement $ 32,000 Annual sales $ 650,000 Annual cash operating expenses $ 470,000 One-time renovation expense in year 3 $ 70,000 The expected life of the project is 4 years. The income tax rate is 30%. The...
Tax rate Expected life of the project Investment required in equipment Salvage value of equipment. Annual...
Tax rate Expected life of the project Investment required in equipment Salvage value of equipment. Annual sales... Annual cash operating expenses 30% $200,000 $0 $520.000 $360,000 13. Strathman Corporation has provided the information shown concerning a capital budgeting project. The company uses straight-line depreciation on all equipment. How much is the income tax expense in year 2? A. $33,000 B. $24,000 C. $48,000 D. $9,000
Correll Corporation is considering a capital budgeting project that would require investing $254,000 in equipment with...
Correll Corporation is considering a capital budgeting project that would require investing $254,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $605,000 and annual incremental cash operating expenses would be $441,000. The company’s income tax rate is 30% and its after-tax discount rate is 15%. The company uses straight-line depreciation. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes...
2. Devon Corporation uses a discount rate of 8% in its capital budgeting. Partial analysis of...
2.
Devon Corporation uses a discount rate of 8% in its capital budgeting. Partial analysis of an investment in automated equipment with a useful life of 6 years has thus far yielded a net present value of -$502,141. This analysis did not include any estimates of the intangible benefits of automating this process nor did it include any estimate of the salvage value of the equipment. (Ignore income taxes.) Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine...
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time hor...
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: Cost of equipment needed $ 290,000 Working capital needed $ 66,000 Repair the equipment in two years $ 21,000 Annual revenues and costs: Sales revenues $ 410,000 Variable expenses $ 210,000 Fixed out-of-pocket operating costs $ 92,000 The piece of equipment mentioned above has a useful life of five years and...
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon....
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: Cost of equipment needed $ 280,000 Working capital needed $ 65,000 Repair the equipment in two years $ 20,500 Annual revenues and costs: Sales revenues $ 400,000 Variable expenses $ 205,000 Fixed out-of-pocket operating costs $ 90,000 The piece of equipment mentioned above has a useful life of five years and...
A company needs an increase in working capital of $50,000 in a project that will last...
A company needs an increase in working capital of $50,000 in a project that will last 4 years. The company's tax rate is 30% 4 and its after-tax discount rate is 8%. Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using table. The present value of the release of the working capital at the end of the project is closest to: 02:-37.10 Multiple Choice $36,750 $15,000 $25,726 < Prev 40.10 Next> 5: Rhoads Corporation is considering...
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon....
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: $310,000 $ 68,000 $ 22.000 Cost of equipment needed Working capital needed Repair the equipment in two years Annual revenues and costs Sales revenues Variable expenses Fixed out-of-pocket operating costs $430,000 $220,000 $ 96,000 The piece of equipment mentioned above has a useful life of five years and zero salvage value....
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon....
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: $260,000 $ 63,000 $ 19,500 Cost of equipment needed Working capital needed Repair the equipment in two years Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $380,000 $195,000 $ 86,999 The piece of equipment mentioned above has a useful life of five years and zero salvage value....
Tax rate Expected life of the project Investment required in equipment Salvage value of equipment. Annual sales... Annual cash operating expenses 30% $200,000 $0 $520.000 $360,000 13. Strathman Corporation has provided the information shown concerning a capital budgeting project. The company uses straight-line depreciation on all equipment. How much is the income tax expense in year 2? A. $33,000 B. $24,000 C. $48,000 D. $9,000
2.
Devon Corporation uses a discount rate of 8% in its capital budgeting. Partial analysis of an investment in automated equipment with a useful life of 6 years has thus far yielded a net present value of -$502,141. This analysis did not include any estimates of the intangible benefits of automating this process nor did it include any estimate of the salvage value of the equipment. (Ignore income taxes.) Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine...
A company needs an increase in working capital of $50,000 in a project that will last 4 years. The company's tax rate is 30% 4 and its after-tax discount rate is 8%. Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using table. The present value of the release of the working capital at the end of the project is closest to: 02:-37.10 Multiple Choice $36,750 $15,000 $25,726 < Prev 40.10 Next> 5: Rhoads Corporation is considering...
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: $310,000 $ 68,000 $ 22.000 Cost of equipment needed Working capital needed Repair the equipment in two years Annual revenues and costs Sales revenues Variable expenses Fixed out-of-pocket operating costs $430,000 $220,000 $ 96,000 The piece of equipment mentioned above has a useful life of five years and zero salvage value....
Lander Company has an opportunity to pursue a capital budgeting project with a five-year time horizon. After careful study, Lander estimated the following costs and revenues for the project: $260,000 $ 63,000 $ 19,500 Cost of equipment needed Working capital needed Repair the equipment in two years Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $380,000 $195,000 $ 86,999 The piece of equipment mentioned above has a useful life of five years and zero salvage value....
Most questions answered within 3 hours.
-
________ unemployment changes slowly and depends on
________.
Select one:
a. Frictional; the rate at which...
asked 6 minutes ago -
These surveys collect information in low- and
middle-income countries regarding the total fertility rate and the...
asked 24 minutes ago -
I need to determine the concentration of hydrogen peroxide in a
solution using titrimetric analysis
25...
asked 33 minutes ago -
Your are the Vice-President of operations for a New Orleans food
chain. In the aftermath of...
asked 38 minutes ago -
Create a flowchart and a program; test the program. Program
Requirements.
- There are 10 members...
asked 38 minutes ago -
Which of the following is not a sensory receptor?
a. a hair cell
b. a rod
c. a...
asked 41 minutes ago -
Does the launch speed depend significantly upon the launching
angle? Is it reasonable?
asked 1 hour ago -
A disc of moment of inertia 3.00 kgm2 is rotating with angular
velocity 2.00 rad/s about...
asked 56 minutes ago -
Hi, can somone help me with this question?
Omega Company reported the following information for the...
asked 1 hour ago -
WHY SOME PEOPLE DECIDE TO STAY IN THEIR HOMES WHEN AN EXTREME
WEATHER EVENT SURROUNDS THEM.
asked 59 minutes ago -
Which of the following is a financial intermediary?
a mutual fund
the stock market
a U.S....
asked 1 hour ago -
Completely and thoroughly explain how control charts could be
used by a company that makes eyeglass...
asked 1 hour ago