Question

Julio Company purchased a $200,000 machine that has a four-year life and no salvage value. The company uses straight-line depreciation on all asset acquisitions and is subject to a 30% tax rate. The proper cash flow to show in a discounted-cash-flow analysis as occurring at time 0 would be:

(A) $15,000.
(B) $50,000.
(C) $140,000.
(D) $35,000.
(E) $200,000.

Answer 1

Answer: The correct answer is "(E) $200,000.".

The proper cash flow to show in a discounted-cash-flow analysis as occurring at time 0 would be: "(E) $200,000.".

Explanation: At time 0, the course of time does not occur therefore there is no discount.