Posted: September 21st, 2016

An investment project is expected to generate earnings before taxes of $60,000 per year. Annual depreciation from the project is $30,000 and the firm’s tax rate is 40 percent. Determine the project’s annual net cash flows.

) An investment project is expected to generate earnings before taxes of $60,000 per year. Annual depreciation from the project is $30,000 and the firm’s tax rate is 40 percent. Determine the project’s annual net cash flows.

The following are the four answers to choose from:
a. $48,300
b. $54,900
c. $43,500
d. None of the above

2) The certainty equivalent factors used to adjust cash flows for risk range from?
a. -1 to +1
b. 0 to infinity
c. +.01 to +.99
d. 0 to +1.0