Sheridan Films Is Considering Some New Equipment Whose Data Are

question 33

Multiple Choice

Sheridan Films is considering some new equipment whose data are shown below.The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down.Also, some new working capital would be required, but it 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 3-year life.What is the project's NPV? $\begin{array}{lr}\text { Project cost of capital ( } \mathrm{r} \text { ) } & 10.0 \% \\\text { Net investment in fixed assets (depreciable basis) } & \$ 70,000 \\\text { Required new working capital } & \$ 10,000 \\\text { Straight-line deprec. rate } & 33.333 \%\\\text { Sal es revenues, each year } & \$ 75,000 \\\text { Operating costs (excl. deprec) , each year } & \$ 30,000 \\\text { Expected pretax salvage value } & \$ 5,000 \\\text { Tax rate } & 25.0 \%\end{array}$

• A) $25,964
• B) $27,330
• C) $28,768
• D) $30,207
• E) $31,717

---

Definitions:

Distal Convoluted

Pertains to the part of the nephron in the kidney farther from the renal corpuscle, involved in the reabsorption of water, sodium, and chloride.

Loop Of Henle

The portion of the renal tubule that curves back toward the renal corpuscle and twists again to become the distal convoluted tubule.

Renal Corpuscle

The initial filtering component of the nephron in the kidney, where blood plasma is filtered through the capillary walls of the glomerulus into the Bowman's capsule.

Renal Artery

A blood vessel that supplies the kidneys with oxygen-rich blood.