A Corporation Is Evaluating the Relevant Cash Flows for a Capital

question 143

Multiple Choice

A corporation is evaluating the relevant cash flows for a capital budgeting decision and mustestimate the terminal cash flow. The proposed machine will be disposed of at the end of its usablelife of five years at an estimated sale price of $2,000. The machine has an original purchase price of$80,000, installation cost of $20,000, and will be depreciated using a 20% CCA rate. The firm has a40 percent tax rate on ordinary income. The terminal cash flow is ____________. Assume the asset pool is closed at the end of the project.

• A) $15,945.60
• B) $5,887.20
• C) $16,200.00
• D) $17,801.10

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Definitions:

Objective

An unbiased, unemotional statement or goal based on facts rather than feelings or opinions.

Peak Performer

An individual who consistently operates at their highest level of skill and performance in their respective field or endeavor.

Personal Connections

The relationships or emotional bonds formed between individuals based on shared experiences, interests, or mutual support.

Avoiding Risks

This refers to strategies or actions taken to minimize potential threats or undesired outcomes in various contexts, including personal, financial, and professional areas.