In 10 Years, Hopkins Company Plans to Receive $9,000 Cash

question 9

Multiple Choice

In 10 years, Hopkins Company plans to receive $9,000 cash from the sale of a machine that has a $5,000 book value.

If the firm is subject to a 30% income tax rate and has an 8% after-tax hurdle rate, the correct discounted net cash flow would be:

• A) $2,916.90.
• B) $3,611.40.
• C) $4,167.00.
• D) $4,722.60.
• E) None of the other answers is correct.

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Definitions:

Restrictive Covenants

Clauses in a contract that place limitations on the actions of parties involved, often used in real estate and employment agreements.