A Project Requires an Initial Investment of $200,000 and Is

question 7

Multiple Choice

A project requires an initial investment of $200,000 and is expected to produce a cash flow before taxes of 120,000 per year for two years. [i.e. cash flows will occur at t = 1 and t =
2]) The corporate tax rate is 30%. The assets will be depreciated using MACRS - 3 year schedule: (t=1, 33%) ; (t = 2: 45%) ; (t = 3: 15%) ; (t = 4: 7%) . The company's tax situation is such that it can make use of all applicable tax shields. The opportunity cost of capital is 12%. Assume that the asset can be sold for book value. Calculate the NPV of the project: (Approximately)

• A) $22,463
• B) $19,315
• C) $16,244
• D) None of the above

Interpret sample proportions in the context of p charts.

Apply statistical process control methods to detect shifts or trends in manufacturing processes.

Understand the basic concepts of odds and probability in the context of logistic regression.

Identify the statistical tools used in logistic regression analysis.

---

Definitions:

Constrained Resource

A limited resource within a production process that restricts the company's ability to produce more goods or services.

Profitable Use

An application or deployment of resources in a manner that generates financial gain or returns above the initial cost.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing to covering fixed costs and generating profit.

Labor Hours

The total hours worked by employees for which they are compensated, often used in calculating labor costs in manufacturing.