(Appendix 8C)Rieben Corporation Is Considering a Capital Budgeting Project That

Multiple Choice

(Appendix 8C) Rieben Corporation is considering a capital budgeting project that would involve investing $120, 000 in equipment with an estimated useful life of 4 years and no salvage value at the end of the useful life.Annual incremental sales from the project would be $320, 000 and the annual incremental cash operating expenses would be $220, 000.A one-time renovation expense of $40, 000 would be required in year 3.The company's income tax rate is 30%. The company uses straight-line depreciation on all equipment.
The income tax expense in year 3 is:

A) $9, 000
B) $30, 000
C) $12, 000
D) $21, 000