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:

Rectal

Relating to, or situated near the rectum, the final section of the large intestine.

Axillary

Pertaining to the armpit area of the body.

Oral

Related to the mouth; often used in contexts such as oral hygiene, oral medications, or oral communication.

Rectal

Pertaining to, involving, or situated near the rectum, which is the final section of the large intestine.