Temple Corp

question 71

Multiple Choice

Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV?

• A) $15,740
• B) $16,569
• C) $17,441
• D) $18,359
• E) $19,325

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Definitions:

Revenue Variances

The difference between actual revenue and budgeted or expected revenue, analyzed to understand and manage financial performance.

Spending Variances

Spending variances are the differences between the actual amount spent and the budgeted or planned amount, often analyzed to control and manage expenses better.

Activity Variance

The difference between the budgeted cost for an activity level and the actual cost incurred, indicating deviations from planned performance.

Net Operating Income

A company's income after operating expenses have been deducted, but before income taxes and interest expenses are taken into account.