A Firm Has an Average Investment of $100,000 During the Year

question 17

Multiple Choice

A firm has an average investment of $100,000 during the year. During the same period, the firm generates an after-tax income of $16,000. If the cost of capital is 15 percent, what is the EVA?

• A)+$16,000
• B)+$15,000
• C)+$1,000
• D)−$1,000

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Definitions:

Twin-Countershaft Transmission

A transmission design with two parallel countershafts, providing high durability and efficiency.

PTO Gears

Gears associated with the Power Take-Off system, which allows auxiliary equipment to draw power from a vehicle's engine.

Mainshaft Washers

Washers placed on the mainshaft of a gearbox or transmission system to ensure proper spacing and prevent metal-to-metal contact.

Low Oil Level

A condition indicating that the volume of oil in a system, such as an engine, is below the recommended threshold, potentially leading to damage or failure.