Thomson Media Is Considering Some New Equipment Whose Data AreA)$20,762 B)$21,854 C)$23,005 D)$24,155 E)$25,363

The Answer of Thomson Media Is Considering Some New Equipment Whose Data AreA)$20,762 B)$21,854 C)$23,005 D)$24,155 E)$25,363

Thomson Media Is Considering Some New Equipment Whose Data AreA)$20,762 B)$21,854 C)$23,005 D)$24,155 E)$25,363

The Answer of Thomson Media Is Considering Some New Equipment Whose Data AreA)$20,762 B)$21,854 C)$23,005 D)$24,155 E)$25,363

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Thomson Media Is Considering Some New Equipment Whose Data Are

question 61

Multiple Choice

Thomson Media is considering some new equipment whose data are shown below.The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down.Also, some new working capital would be required, but it would be recovered at the end of the project's life.Revenues and other operating costs are expected to be constant over the project's 3-year life.What is the project's NPV?
$\begin{array} { | l | l | } \hline \text { WACC } & 10.0 \% \\\hline \text { Net investment in fixed assets (depreciable basis) } & \$ 70,000 \\\hline \text { Required net operating working capital } & \$ 10,000 \\\hline \text { Straight-line depreciation rate } & 33.333 \% \\\hline \text { Annual sales revenues } & \$ 57,000 \\\hline \text { Annual operating costs (excl. depreciation) } & \$ 30,000 \\\hline \text { Expected pre-tax salvage value } & \$ 5,000 \\\hline \text { Tax rate } & 35.0 \% \\\hline\end{array}$

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Reasoning

The process of figuring out the implications of particular beliefs.

Abstract Thinking

The ability to think about objects, principles, and ideas that are not physically present, a higher-level cognitive skill enabling conceptual understanding.

Intelligence

The mental capacity to learn from experience, solve problems, and use knowledge to adapt to new situations.

Intelligence

The ability to learn, understand, and apply knowledge, reason logically, plan effectively, solve problems, comprehend complex ideas, and adapt to new situations.