Reference: 10-06
the Becker Company Is Interested in Buying a Piece

question 80

Multiple Choice

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: $$\begin{array} { | l | c | } \hline \text { Cost of required equipment } & \$ 250,000 \\\hline \text { Working capital required } & \$ 100,000 \\\hline \text { Annual operating cash inflows } & \$ 80,000 \\\hline \text { Cash repair at end of 4 years } & \$ 40,000 \\\hline \text { Salvage value at end of 6 years } & \$ 90,000 \\\hline\end{array}$$ 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 the net cash flows (all cash inflows less all cash outflows) occurring during year 4 is:

• A)$40,000.
• B)$54,640.
• C)$27,320.
• D)$42,790.

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Definitions:

Critical Period

A specific timeframe in the development of an organism during which it is particularly sensitive to certain environmental stimuli, with long-lasting effects on future development.

Environmental Influences

Environmental influences involve external factors and conditions that impact an individual's physical, psychological, and social development.

Sensitive Period

A point in development when organisms are particularly susceptible to certain kinds of stimuli in their environments, but the absence of those stimuli does not always produce irreversible consequences.

Synaptic Pruning

The process during brain development where extra neurons and synaptic connections are eliminated to increase the efficiency of neuronal transmissions.