Mini Inc Is Contemplating a Capital Project Costing $47,019 This Project Is
A) Unacceptable Because It Earns a Rate

question 148

Multiple Choice

Mini Inc. is contemplating a capital project costing $47,019. The project will provide annual cost savings of $18,000 for 3 years and have a salvage value of $3,000. The company's required rate of return is 10%. The company uses straight-line depreciation. $\begin{array}{llr}\text { Year } & \begin{array}{l}\text { Present Value } \\\text { of } 1 \text { at } 10 \%\end{array} & \begin{array}{l}\text { PV of an Annuity } \\\text { of } 1 \text { at } 10 \%\end{array} \\1 & .909 & .909 \\2 & .826 & 1.736 \\3 & .751 & 2.487\end{array}$ This project is

• A) unacceptable because it earns a rate less than 10%.
• B) acceptable because it has a positive NPV.
• C) unacceptable because it has a negative NPV.
• D) acceptable because it has a zero NPV.

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Definitions:

Washington

The capital city of the United States, named after George Washington, and serving as the seat of the federal government.

Office

A room or set of rooms used for work, especially clerical or professional work, often within a larger organization or business structure.

Macon's Bill No. 2

A law enacted by the United States Congress in 1810, aiming to motivate Great Britain and France to stop their restrictions against U.S. shipping during the Napoleonic Wars by offering to resume trade with whichever nation lifted its restrictions first.