Wedge corporation uses a discount rate of 14 and has a tax, Ask an Expert

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Wedge Corporation uses a discount rate of 14% and has a tax rate of 30%. The following cash flows occur in the last year of a 10-year equipment selection investment project:

Cost savings for the year = $180,000
Working capital released = $120,000
Salvage value of equipment = $25,000

At the end of the ten years when the equipment is sold, its net book value for tax purposes is zero. The total after-tax present value of the cash flows above is closest to:

A. $45,765

B. $48,465

C. $61,425

D. $71,145

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9970386

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