For a New Project, a Company Plans to Invest $15,000

question 9

Multiple Choice

For a new project, a company plans to invest $15,000 in inventory, $8,000 in accounts receivable and $150,000 in fixed assets with a salvage value of $44,001. Accounts payable will increase by
$13,000 when the project starts. Assets are depreciated straight line to zero over the 4-year life of
The project. Taxes are 35%. Which one of the following statements is correct concerning the cash
flow in year 4?

• A) $15,000 is a cash outflow from inventory.
• B) The cash flow from the salvage value is equal to $44,000 multiplied by 35%.
• C) $13,000 is a cash inflow from accounts payable.
• D) The net salvage value is a cash outflow.
• E) $8,000 is a cash inflow from accounts receivable.

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Definitions:

Consumer Needs

Fundamental requirements that motivate individuals to make purchase decisions, such as food, shelter, and safety.

Paraphilia Behaviors

Patterns of sexual interest or activities that deviate significantly from the norm, often involving atypical objects, fantasies, behaviors, or individuals.

Ethnic Groups

Social groups that share a common national or cultural tradition.

Socioeconomic Groups

Categories of people sharing similar levels of wealth, income, education, and occupational status in society.