A Project Will Produce Operating Cash flOws of $60,000 a Year

question 3

Multiple Choice

A project will produce operating cash flows of $60,000 a year for four years. During the life of the project, inventory will be lowered by $20,000 and accounts receivable will increase by $25,000.
Accounts payable will decrease by $10,000. The project requires the purchase of equipment at an
Initial cost of $200,000. 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 $30,000
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 12%?

• A) -$17,759.04
• B) -$13,693.50
• C) -$4,160.73
• D) $2,194.46
• E) $10,839.27

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Definitions:

Reflexive Behaviors

Automatic responses or actions without conscious thought, often as a result of stimuli or habits.

Operant Behaviors

Behaviors that are controlled or influenced by their consequences, including rewards and punishments.

Changing The Consequences

Changing the consequences involves altering the outcomes or repercussions of actions in order to influence behavior, often implemented to encourage positive behavior or deter negative actions.

Primary Reinforcer

A naturally reinforcing item or outcome, such as food or water, that does not require learning to be desirable.