Reference: 10-07
UR Company Is Considering Rebuilding and Selling Used

question 44

Multiple Choice

Reference: 10-07
UR Company is considering rebuilding and selling used alternators for automobiles. The company estimates that the net operating cash flows (sales less cash operating expenses) arising from the rebuilding and sale of the used alternators would be as follows (numbers in parentheses indicate an outflow) : $$\begin{array} { | l | l | } \hline \text { Years } 1 - 10 & \$ 90,000 \\\hline \text { Year } 11 & \$ ( 20,000 ) \\\hline \text { Year } 12 & \$ 100,000 \\\hline\end{array}$$ In addition to the above net operating cash flows, UR Company would purchase production equipment costing
$200,000 now to use in the rebuilding of the alternators. The equipment would have a 12-year life and a $15,000 salvage value. The company's discount rate is 10%.
-The net present value of all cash flows associated with this investment (rounded to the nearest dollar) is:

• A)$377,950.
• B)$382,735.
• C)$392,950.
• D)$362,950.

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Definitions:

Epidural

A medical procedure involving the injection of anesthesia into the epidural space of the spinal cord to provide pain relief, particularly during childbirth.

Spinal Canal

The cylindrical space within the spine that houses and protects the spinal cord.

Anesthesia

A medical intervention that results in partial or complete loss of sensation, often used to eliminate pain during surgery.

Lamaze Method

A childbirth preparation technique focusing on breathing, relaxation, and education to reduce pain and increase comfort during labor.