# Sample Quiz #7 Questions – based on Chapter 14 ```Sample Quiz #7 Questions – based on Chapter 14
1. If
the tax rate is 32%, what is the after tax impact on
income of a short term business transaction with cash
inflows of \$35,000 and cash outflows of \$26,000. All
cash flows are taxation relevant.
A.
B.
C.
D.
\$2,880
\$9,000
\$35,000
\$6,120
2. If
A.
B.
C.
D.
\$2,500
\$1,780
\$3,750
\$2,670
the tax rate is 40%, what is the present value of
the tax savings from the depreciation tax shield in the
third year of the life of an asset being depreciated
using the straight-line method with no deduction for
salvage value as is typical of tax depreciation? The
cost of the asset is \$50,000. The asset has an economic
life of 8 years. The time value of money rate is 12%.
A present value table is provided for use in answering
this question. ===
Present value factors for
12 % rate:
time
point
0
1
2
3
4
5
6
7
8
9
10
Q#
5/29/2016
1.
D
single amount
discount
1.000
0.893
0.797
0.712
0.636
0.567
0.507
0.452
0.404
0.361
0.322
2.
B
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