Goldsmith Labs Recovers Gold from Printed Circuit Boards

question 12

Multiple Choice

Goldsmith Labs recovers gold from printed circuit boards. It has developed new equipment for this purpose. You have the following data.
(1) The equipment costs $250,000.
(2) It costs $200,000 per year to operate.
(3) It has an economic life of five years and is depreciated using the straight-line method.
(4) It will recover 300 ounces of gold per year.
(5) The current price of gold is $900 per ounce.
(6) The tax rate is 30 percent.
(7) The cost of capital is 8 percent.
What is the NPV of installing this equipment?

• A)$430,400
• B)$520,510
• C)$470,400
• D)$195,911

---

Definitions:

Insulators

Materials or objects that do not easily conduct electricity, used to prevent unwanted flow of current.

Electromotive Force

The energy supplied per charge by a source of electrical energy, such as a battery or generator, measured in volts.

Volts

The unit of measurement for electric potential difference or electromotive force, central to understanding electric circuits.

Solid-State Switches

Electronic switching devices that control the flow of electricity without moving parts, using semiconductor materials instead.