$$\text { Reference: } 10 - 02$$ 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:

Electronic Commerce

The buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.

Inventory

The total amount of goods or materials held by a business, intended for sale or production purposes, requiring efficient management to optimize supply chain operations.

Promotion

Marketing activities aimed at increasing awareness, interest, and sales of a product or service, often involving advertising, sales, and public relations strategies.

Distribution

The process involved in moving a product from the manufacturer or supplier to the consumer, including transportation, warehousing, and retailing.