The Tattle Teller Has a Printing Press Sitting Idly in Its

question 92

Multiple Choice

The Tattle Teller has a printing press sitting idly in its back room.The press has no market value to another printer because the machine utilizes old technology.The firm could get $480 for the press as scrap metal.The press is six years old and originally cost $174,000.The current book value is $3,570.The president of the firm is considering a new project and feels he can use this press for that project.What value, if any, should be assigned to the press as an initial cost of the new project?

• A)$0
• B)$480
• C)$3,570
• D)$3,090
• E)$4,050

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Definitions:

Pledging Accounts Receivable

Using accounts receivable as collateral to secure a loan.

Factoring

A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Recourse

In secured lending, if the asset collateralizing a loan proves not to have the value anticipated, recourse implies the borrower is still responsible for the debt. The lender is said to have recourse to the borrower.

Seasonal Working Capital

Additional working capital needed to support fluctuations in business activity due to seasonal changes in demand.