$$\text { Reference: } 10 - 02$$ Oriental Company Has Gathered the Following Data on a Proposed

question 3

Multiple Choice

$$\text { Reference: } 10 - 02$$ Oriental Company has gathered the following data on a proposed investment project: $$\begin{array} { | l | l | } \hline \text { Investment in depreciable equipment } & \$ 200,000 \\\hline \text { Annual net cash flows } & \$ 50,000 \\\hline \text { Life of the equipment } & 10 \text { years } \\\hline \text { Salvage value } & \$ 20 \\\hline \text { Discount rate } & 10 \% \\\hline\end{array}$$ The company uses straight-line depreciation on all equipment.
-Sam Weller is thinking of investing $70,000 to start a bookstore. Sam plans to withdraw $15,000 from the business at the end of each year for the next five years. At the end of the fifth year, Sam plans to sell the business for $110,000 cash. At a 12% discount rate, what is the net present value of the investment?

• A)$62,370.
• B)$46,445.
• C)$54,075.
• D)$70,000.

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Definitions:

Transition

Transition refers to the process or period of changing from one state or condition to another, often used in the context of personal, professional, or societal changes.

School Setting

An educational environment or context where formal learning and teaching occur.

Dropping Out

the act of leaving school or another educational institution before completing the course of study.

Prevent

Prevent refers to taking measures to ensure something undesirable, such as an issue or condition, does not happen.