Magellen Industries Is Analyzing a New Project

question 69

Multiple Choice

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: Initial requirement for equipment: $120,000 Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the net present value under the best-case scenario?

• A) -$11,664
• B) -$7,946
• C) $7,946
• D) $11,665
• E) $37,946

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