Filters
Question type
Study Flashcards

Patenaude Corporation has provided the following information concerning a capital budgeting project: Patenaude Corporation has provided the following information concerning a capital budgeting project: The expected life of the project and the equipment is 3 years and the equipment has zero salvage value.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 and the depreciation expense on the equipment would be $230,000 per year.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 net annual operating cash inflow is the difference between the incremental sales revenue and incremental cash operating expenses. Required: Determine the net present value of the project.Show your work! The expected life of the project and the equipment is 3 years and the equipment has zero salvage value.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 and the depreciation expense on the equipment would be $230,000 per year.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 net annual operating cash inflow is the difference between the incremental sales revenue and incremental cash operating expenses. Required: Determine the net present value of the project.Show your work!

Correct Answer

verifed

verified

(Appendix 13C) Rollans Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Rollans Corporation has provided the following information concerning a capital budgeting 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) $105,000 B) $17,500 C) $150,500 D) $28,000 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:


A) $105,000
B) $17,500
C) $150,500
D) $28,000

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Marasco Corporation has provided the following information concerning a capital budgeting project: Marasco Corporation has provided the following information concerning a capital budgeting project: The income tax rate is 30%.The after-tax discount rate is 13%.The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $20,000.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 net present value of the project is closest to: A) $91,000 B) $128,199 C) $77,650 D) $48,199 The income tax rate is 30%.The after-tax discount rate is 13%.The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $20,000.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 net present value of the project is closest to:


A) $91,000
B) $128,199
C) $77,650
D) $48,199

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

Eison Corporation has provided the following information concerning a capital budgeting project: Eison Corporation has provided the following information concerning a capital budgeting project: The company uses straight-line depreciation on all equipment. The income tax expense in year 3 is: A) $21,000 B) $42,000 C) $15,000 D) $6,000 The company uses straight-line depreciation on all equipment. The income tax expense in year 3 is:


A) $21,000
B) $42,000
C) $15,000
D) $6,000

E) A) and D)
F) C) and D)

Correct Answer

verifed

verified

(Appendix 13C) Hinger Corporation is considering a capital budgeting project that would require investing $120,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $350,000 and annual incremental cash operating expenses would be $250,000. The project would also require an immediate investment in working capital of $10,000 which would be released for use elsewhere at the end of the project. The project would also require a one-time renovation cost of $40,000 in year 3. The company's income tax rate is 35% and its after-tax discount rate is 11%. 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 into account in its capital budgeting. -The total cash flow net of income taxes in year 2 is:


A) $49,500
B) $100,000
C) $75,500
D) $70,000

E) A) and C)
F) C) and D)

Correct Answer

verifed

verified

(Appendix 13C) Vanzant Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Vanzant Corporation has provided the following information concerning a capital budgeting project: 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 3 is: A) $30,000 B) $21,000 C) $9,000 D) $48,000 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 3 is:


A) $30,000
B) $21,000
C) $9,000
D) $48,000

E) A) and C)
F) B) and D)

Correct Answer

verifed

verified

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% and its after-tax discount rate is 8%.The present value of the release of the working capital at the end of the project is closest to:


A) $36,750
B) $15,000
C) $25,726
D) $35,000

E) All of the above
F) A) and B)

Correct Answer

verifed

verified

Income taxes have no effect on whether a capital budgeting project should or should not be accepted in a for-profit company.

A) True
B) False

Correct Answer

verifed

verified

(Appendix 13C) Reye Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Reye Corporation has provided the following information concerning a capital budgeting project: The company's income tax rate is 30% 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 total cash flow net of income taxes in year 2 is: A) $60,000 B) $110,000 C) $18,000 D) $92,000 The company's income tax rate is 30% 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 total cash flow net of income taxes in year 2 is:


A) $60,000
B) $110,000
C) $18,000
D) $92,000

E) A) and B)
F) A) and D)

Correct Answer

verifed

verified

(Appendix 13C) Prudencio Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Prudencio Corporation has provided the following information concerning a capital budgeting 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 3 is: A) $21,000 B) $12,000 C) $9,000 D) $33,000 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 3 is:


A) $21,000
B) $12,000
C) $9,000
D) $33,000

E) C) and D)
F) B) and C)

Correct Answer

verifed

verified

(Appendix 13C) Boynes Corporation is considering a capital budgeting project that would require investing $200,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $490,000 and annual incremental cash operating expenses would be $330,000. The project would also require an immediate investment in working capital of $10,000 which would be released for use elsewhere at the end of the project. The project would also require a one-time renovation cost of $70,000 in year 3. The company's income tax rate is 30% and its after-tax discount rate is 14%. 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 into account in its capital budgeting. -The net present value of the entire project is closest to:


A) $259,000
B) $126,876
C) $214,750
D) $132,796

E) B) and C)
F) C) and D)

Correct Answer

verifed

verified

(Appendix 13C) Lafromboise Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Lafromboise Corporation has provided the following information concerning a capital budgeting project: 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 net present value of the entire project is closest to: A) $246,590 B) $238,670 C) $322,000 D) $366,920 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 net present value of the entire project is closest to:


A) $246,590
B) $238,670
C) $322,000
D) $366,920

E) B) and C)
F) B) and D)

Correct Answer

verifed

verified

(Appendix 13C) Mesko Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Mesko 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 15%. 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 net present value of the entire project is closest to: A) $71,396 B) $151,396 C) $122,160 D) $130,000 The company's income tax rate is 35% and its after-tax discount rate is 15%. 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 net present value of the entire project is closest to:


A) $71,396
B) $151,396
C) $122,160
D) $130,000

E) C) and D)
F) None of the above

Correct Answer

verifed

verified

(Appendix 13C) Bourland Corporation is considering a capital budgeting project that would require investing $80,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $250,000 and annual incremental cash operating expenses would be $180,000. The project would also require a one-time renovation cost of $40,000 in year 3. The company's income tax rate is 30% and its after-tax discount rate is 8%. 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 into account in its capital budgeting. -The net present value of the entire project is closest to:


A) $14,590
B) $50,380
C) $70,000
D) $27,310

E) B) and D)
F) A) and C)

Correct Answer

verifed

verified

(Appendix 13C) Planas Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Planas 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 14%. 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 3 is: A) $14,000 B) $21,000 C) $3,500 D) $10,500 The company's income tax rate is 35% and its after-tax discount rate is 14%. 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 3 is:


A) $14,000
B) $21,000
C) $3,500
D) $10,500

E) B) and C)
F) A) and C)

Correct Answer

verifed

verified

(Appendix 13C) Houze Corporation has provided the following information concerning a capital budgeting project: (Appendix 13C) Houze Corporation has provided the following information concerning a capital budgeting project: 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 net present value of the entire project is closest to: A) $23,809 B) $65,000 C) $919 D) $53,660 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 net present value of the entire project is closest to:


A) $23,809
B) $65,000
C) $919
D) $53,660

E) A) and D)
F) A) and C)

Correct Answer

verifed

verified

Dunstan Corporation is considering a capital budgeting project that involves investing $450,000 in equipment that would have a useful life of 3 years and zero salvage value.The company would also need to invest $20,000 immediately in working capital which would be released for use elsewhere at the end of the project in 3 years.The net annual operating cash inflow,which is the difference between the incremental sales revenue and incremental cash operating expenses,would be $220,000 per year.The company uses straight-line depreciation and the depreciation expense on the equipment would be $150,000 per year.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 rate is 35%.The after-tax discount rate is 11%. Required: Determine the net present value of the project.Show your work!

Correct Answer

verifed

verified

Galati Corporation has provided the following information concerning a capital budgeting project: Galati Corporation has provided the following information concerning a capital budgeting project: 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.The depreciation expense will be $20,000 per year.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 rate is 30% and the after-tax discount rate is 8%. Required: Determine the net present value of the project.Show your work! 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.The depreciation expense will be $20,000 per year.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 rate is 30% and the after-tax discount rate is 8%. Required: Determine the net present value of the project.Show your work!

Correct Answer

verifed

verified

Shanks Corporation is considering a capital budgeting project that involves investing $600,000 in equipment that would have a useful life of 3 years and zero salvage value.The company would also need to invest $20,000 immediately in working capital which would be released for use elsewhere at the end of the project in 3 years.The net annual operating cash inflow,which is the difference between the incremental sales revenue and incremental cash operating expenses,would be $300,000 per year.The project would require a one-time renovation expense of $60,000 at the end of year 2.The company uses straight-line depreciation and the depreciation expense on the equipment would be $200,000 per year.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 rate is 35%.The after-tax discount rate is 15%. Required: Determine the net present value of the project.Show your work!

Correct Answer

verifed

verified

(Appendix 13C) Stockinger Corporation has provided the following information concerning a capital budgeting project: Investment requiredin equipment. $280,000Expected life of the project. 4 Salvage value of equipment. $0 Annual sales.$580,000Annual cash operating expenses $420,000Working capital requirement. $30,000One-time renovation expense in year 3$80,000\begin{array}{lr}\text {Investment requiredin equipment. }&\$280,000\\\text {Expected life of the project. }&4\\\text { Salvage value of equipment. }&\$0\\\text { Annual sales.}&\$580,000\\\text {Annual cash operating expenses }&\$420,000\\\text {Working capital requirement. }&\$30,000\\\text {One-time renovation expense in year 3}&\$80,000\\\end{array} The company's income tax rate is 35% and its after-tax discount rate is 11%. 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 total cash flow net of income taxes in year 2 is:


A) $128,500
B) $160,000
C) $90,000
D) $76,500

E) All of the above
F) C) and D)

Correct Answer

verifed

verified

Showing 61 - 80 of 150

Related Exams

Exam 1

Managerial Accounting and Cost Concepts

299 Questions

Exam 2

Job-Order Costing: Calculating Unit Production Costs

292 Questions

Exam 3

Job-Order Costing: Cost Flows and External Reporting

255 Questions

Exam 4

Process Costing

138 Questions

Exam 5

Cost-Volume-Profit Relationships

260 Questions

Exam 6

Variable Costing and Segment Reporting: Tools for Management

291 Questions

Exam 7

Super-Variable Costing

49 Questions

Exam 8

Master Budgeting

234 Questions

Exam 9

Flexible Budgets and Performance Analysis

417 Questions

Exam 10

Standard Costs and Variances

247 Questions

Exam 11

Performance Measurement in Decentralized Organizations

180 Questions

Exam 12

Differential Analysis: The Key to Decision Making

203 Questions

Exam 13

Capital Budgeting Decisions

179 Questions

Exam 14

Statement of Cash Flows

132 Questions

Exam 15

Financial Statement Analysis

289 Questions

Exam 16

Cost of Quality

66 Questions

Exam 17

Activity-Based Absorption Costing

20 Questions

Exam 18

The Predetermined Overhead Rate and Capacity

42 Questions

Exam 19

Job-Order Costing: a Microsoft Excel-Based Approach

28 Questions

Exam 20

Fifo Method

100 Questions

Exam 21

Service Department Allocations

60 Questions

Exam 22

Analyzing Mixed Costs

81 Questions

Exam 23

Time-Driven Activity-Based Costing: a Microsoft Excel-Based Approach

123 Questions

Exam 24

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

177 Questions

Exam 25

Standard Cost Systems: a Financial Reporting Perspective Using Microsoft Excel

138 Questions

Exam 26

Transfer Pricing

102 Questions

Exam 27

Service Department Charges

44 Questions

Exam 28

Pricing Decisions

149 Questions

Exam 29

The Concept of Present Value

16 Questions

Exam 31

the Direct Method of Determining the Net Cash Provided by Operating Activities

56 Questions

Show Answer