A Project Will Produce Operating Cash flOws of $45,000 a Year

question 147

Multiple Choice

A project will produce operating cash flows of $45,000 a year for four years. During the life of the project, inventory will be lowered by $30,000 and accounts receivable will increase by $15,001.
Accounts payable will decrease by $10,001. The project requires the purchase of equipment at an
Initial cost of $120,001. The equipment will be depreciated straight-line to a zero book value over
The life of the project. The equipment will be salvaged at the end of the project creating a $25,000
After-tax cash flow. At the end of the project, net working capital will return to its normal level. What
Is the net present value of this project given a required return of 14%?

• A) $3,483.48
• B) $16,117.05
• C) $27,958.66
• D) $32,037.86
• E) $49,876.02

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Definitions:

Postoperative Wound Care

The management and treatment of surgical incisions and wounds to promote healing and prevent infection after surgery.

Dressing

A protective or therapeutic covering applied to a wound or an area of damaged skin.

Floater

A nonsterile assistant who is free to move about the room during surgery and attend to unsterile needs.

Reaction To The Anesthetic

A patient's physical or psychological response to anesthesia, which can range from mild side effects to severe allergic reactions.