Reference: 10-14
Jimbob Co Jimbob Co Uses a 10% Discount Rate and the Incremental Cost

question 97

Multiple Choice

Reference: 10-14
Jimbob Co. is considering two alternatives to replace a delivery truck. The following data have been gathered concerning these two alternatives: $$\begin{array} { | l | l | r | } \hline & \text { Truck } A & \text { Truck } B \\\hline \text { Purchase cost new } & \$ 50,000 & \$ 70,000 \\\hline \text { Major repairs end of year } 2 & \$ 10,000 & 8,000 \\\hline \text { Annual cash operating costs } & \$ 20,000 & \$ 18,000 \\\hline \text { Salvage value at the end of 3 years } & \$ 15,000 & \$ 20,000 \\\hline\end{array}$$ Jimbob Co. uses a 10% discount rate and the incremental cost approach to capital budgeting analysis. Both trucks are expected to have a useful life of three years.
-The following data pertain to an investment proposal: $$\begin{array} { | l | l | } \hline \text { Investment in the project (equipment) } & \$ 14,000 \\\hline \text { Net annual cash inflows promised } & \$ 2,800 \\\hline \text { Working capital required } & \$ 5,000 \\\hline \text { Salvage value of the equipment } & \$ 1,000 \\\hline \text { Life of the project } & 10 \text { years } \\\hline\end{array}$$ The working capital would be released for use elsewhere when the project is completed. What is the net present value of the project, using a discount rate of 8%?

• A)$251.
• B)$2,566.
• C)$5,251.
• D)($251).

Comprehend the challenges and complexities of different forms of parenting.

Identify and describe the characteristics of nonbiological parenting.

Analyze the dynamics of intergenerational relationships and their evolution.

Recognize the societal and familial roles of the middle-aged population, particularly in caregiving across generations.

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Definitions:

Tax Rate Schedule

A chart that helps determine tax liability based on income levels and filing statuses, guiding how much tax is owed.

Simplified Tax Formula

A streamlined method for calculating taxable income, starting with adjusted gross income, subtracting either standard or itemized deductions, and personal exemptions.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or expenditure), revealing the percentage of income paid in taxes.

Tax Liability

The total amount of tax owed to the government by an individual, corporation, or other entity in a given tax period.