$$\text { Reference: } 10 - 06$$ The Becker Company Is Interested in Buying a Piece of Is

question 54

Multiple Choice

$$\text { Reference: } 10 - 06$$ The Becker Company is interested in buying a piece of equipment that it needs. The following data have been assembled concerning this equipment: $$\begin{array} { | l | l | } \hline \text { Cost of required equipment } & \$ 250,000 \\\hline \text { Working capital required } & \$ 100,000 \\\hline \text { Annual operating cash inflows } & \$ 80,000 \\\hline \text { Cash repair at end of 4 years } & \$ 40,000 \\\hline \text { Salvage value at end of 6 years } & \$ 90,000 \\\hline\end{array}$$ This equipment is expected to have a useful life of 6 years. At the end of the sixth year the working capital would be released for use elsewhere. The company's discount rate is 10%.
-The present value of all future operating cash inflows is closest to:

• A)$348,400.
• B)$278,700.
• C)$480,000.
• D)$452,300.

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Definitions:

3M Model

A framework in marketing used to guide the development of messaging and communication strategies based on three fundamental elements: Market, Message, and Medium.

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