Question 5
The manager of the Wales division of NLH, Inc. is considering making an investment to expand operations.

The investment has the following projections:

Revenues = $100,000

Cost of goods sold = $60,000

Operating expenses = $25,000

Income taxes = $5,000

Investment = $180,000

The required rate of return is 8%.

The manager has a personal preference to NOT make the investment and is about to make a presentation about the investment to upper management.

Which of the following is true?

1 point

The manager will use net income after taxes as the profit measure, but not net income before taxes.


The manager will use net income before taxes as the profit measure, but not net income after taxes.


The manager will not use either net income amount as the profit measure.


The manager will use either net income before taxes or net income after taxes as the profit measure.