Fool Proof Software Is Considering a New Project Whose Data

question 71

Multiple Choice

Fool Proof Software is considering a new project whose data are shown below.The equipment that would be used has a 3-year tax life,and the allowed depreciation rates for such property are 33%,45%,15%,and 7% for Years 1 through 4.Revenues and other operating costs are expected to be constant over the project's 10-year expected life.What is the Year 1 cash flow? $$\begin{array} { l r } \text { Equipment cost (depreciable basis) } & \$ 48,000 \\\text { Sales revenues, each year } & \$ 60,000 \\\text { Operating costs (excl. depr.) } & \$ 25,000 \\\text { Tax rate } & 35.0 \%\end{array}$$
?

• A) $29,426
• B) $33,387
• C) $28,294
• D) $28,860
• E) $29,709

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Definitions:

Cranial Nerve VIII

The vestibulocochlear nerve, responsible for hearing and balance.

Hearing

The faculty of perceiving sounds, which occurs when sound waves are converted into electrical signals and interpreted by the brain.

Middle Ear

The section of the ear between the eardrum and the oval window, containing the three auditory ossicles that transmit sound.

Vibrations

Oscillations that occur in various physical entities, which can be felt or heard as waves through mediums like air or water.