Foley Systems Is Considering a New Investment Whose Data Are

question 62

Multiple Choice

Foley Systems is considering a new investment whose data are shown below.The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value, and would require some additional working capital that would be recovered at the end of the project's life.Revenues and other operating costs are expected to be constant over the project's life.What is the project's NPV? (Hint: Cash flows are constant in Years 1 to 3.)
WACC 10.0%
Net investment in fixed assets (basis) $75,000
Required net operating working capital $15,000
Straight-line depreciation rate 33.333%
Annual sales revenues $75,000
Annual operating costs (excl. depreciation) $25,000
Tax rate 35.0%

• A)$23,852
• B)$25,045
• C)$26,297
• D)$27,612
• E)$28,993

---

Definitions:

Cytoplasm

The jelly-like substance within a cell that contains the organelles and is enclosed by the cell membrane.

Nuclear Membranes

The double-layered membrane surrounding a cell's nucleus, controlling the passage of substances in and out of the nucleus.

Cytoplasm

The jelly-like substance within a cell, excluding the nucleus, that contains organelles and is the site of most cellular processes.

Food And Drug Administration

A federal agency of the United States responsible for regulating and supervising the safety of foods, dietary supplements, drugs, cosmetics, and medical devices.