Cabe Corporation Uses a Discount Rate of 18% in Its

question 161

Multiple Choice

Cabe Corporation uses a discount rate of 18% in its capital budgeting. Partial analysis of an investment in automated equipment with a useful life of 7 years has thus far yielded a net present value of -$155,606. This analysis did not include any estimates of the intangible benefits of automating this process nor did it include any estimate of the salvage value of the equipment. (Ignore income taxes.) Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
Ignoring any salvage value, to the nearest whole dollar how large would the additional cash flow per year from the intangible benefits have to be to make the investment in the automated equipment financially attractive?

• A) $40,820
• B) $22,229
• C) $28,009
• D) $155,606

Recognize features and functionalities of Excel for creating, editing, and evaluating scenarios.

Understand the process of activating and using add-ins like Solver.

Recognize how to handle specific Solver constraint scenarios, including dealing with whole numbers and exact amounts.

Use Power Pivot and the data model to enhance data analysis.

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Definitions:

Stereotyping

The oversimplified and generalized beliefs or expectations about individuals based on their membership in a certain group.

Stereotyping

The process of attributing a specific set of traits to a collective of individuals, disregarding their unique differences.

Stereotypic Information

Information that is oversimplified, generalized, or exaggerated characteristics pertaining to a group, often leading to prejudiced attitudes or beliefs.

Self-fulfilling Prophecy

A belief or expectation that causes itself to become true, merely because the belief influences behavior towards making it happen.