A Project Has an Initial Cost of $46,000 for Equipment

question 371

Multiple Choice

A project has an initial cost of $46,000 for equipment, which will be depreciated straight-line to zero over the four-year life of the project. There is no salvage value on the equipment. No working
Capital is required. Sales are estimated at 10,000 units at a selling price of $22.50 per unit. Variable
Costs are $14.75 and fixed costs are $56,500. The tax rate is 34% and the required rate of return is
10%) For every $1 increase in the variable cost per unit the net present value will:

• A) Decrease by $20,922.
• B) Decrease by $10,593.
• C) Decrease by $264.
• D) Increase by $264.
• E) Increase by $10,593.

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Definitions:

Genital Stage

In Freudian psychology, the final stage of psychosexual development, occurring during puberty, where sexual energies are focused on the genitals.

Psychosexual Development

A Freudian concept describing how personality development is linked to sexual development from early childhood through various phases of childhood.

Object Relations Perspective

A psychoanalytic theory focusing on how individuals internalize and interact with objects (significant others) and the impact of these relationships on personality development.

Interpersonal Relationships

The connections and bonds formed between individuals based on interaction, communication, and social activities.