Coache corporation is considering a capital budgeting project that would require an investment of $120,000 in equipment with a 4 year useful life and zero salvage value. the annual incremental sales would be $310,000 and the annual incremental cash operating expenses would be $230,000. in addition, there would be a one-time renovation expense in year 3 of $30,000. the company's income tax rate is 30%. the company uses straight-line depreciation on all equipment. the total cash flow net of income taxes in year 3 is:

a. $44,000
b. $35,000
c. $65,000
d. $50,000

a. $44,000

Explanation:

The computation of the total cash flow net of income taxes in year 3 is shown below:

= Incremental sales - annual incremental cash operating expenses - one-time renovation expense - depreciation expense - income tax expense + depreciation expense

= $310,000 - $230,000 - $30,000 - $30,000 - $6,000 + $30,000

= $44,000

Since depreciation is a non-cash expense so it would be added back to the computation part

The depreciation expense would be

= (Original cost - residual value) ÷ (useful life)

= ($120,000 - $0) ÷ (4 years)

= ($120,000) ÷ (4 years)  

= $30,000

And, the income tax expense would be

= (Incremental sales - annual incremental cash operating expenses - one-time renovation expense - depreciation expense) × tax rate

= ($310,000 - $230,000 - $30,000 - $30,000) × 30%

= $20,000  × 30%

= $6,000

answer; /// i do believe that the above is (true)

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.