Shunt Technology Will Spend $800,000 on a Piece of Equipment

question 3

Multiple Choice

Shunt Technology will spend $800,000 on a piece of equipment that will manufacture fine wire for the electronics industries. The shipping and installation charges will be $240,000 and net working capital will increase $48,000.The equipment will replace an existing machine that has a salvage value of $75,000 and a book value of $125,000. If Shunt has a current marginal tax rate of 34 percent, what is the net investment?

• A) $1,030,000
• B) $1,163,000
• C) $1,033,000
• D) $996,000

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Definitions:

Collections

The process of pursuing payment on debts owed by individuals or businesses, typically involving accounts receivable.

Credit Sales

Transactions where the buyer purchases goods or services on credit, agreeing to pay the seller at a later date, thus generating accounts receivable for the seller.

Monthly Sale

Financial transactions or revenue generated from sales within a particular month.

Credit Sales

Sales transactions where the payment is deferred to a future date, typically documented with an invoice.