Question: Project Beta is a 4-year project which requires an initial outlay of $2,000. This outlay will be depreciated usingstraight-line depreciation over the life of theproject.

Project Beta is a 4-year project which requires an initial outlay of $2,000. This outlay will be depreciated usingstraight-line depreciation over the life of theproject. It will generate incremental revenue of $2000 per year and incremental costs (excluding depreciation) of $400. The tax rate is 30%.

What is the project's annual after-tax incremental earnings?





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