Margarite's Enterprises Is Considering a New Project

question 21

Multiple Choice

Margarite's Enterprises is considering a new project. The project will require $325,000 for new fixed assets, $160,000 for additional inventory and $35,000 for additional accounts receivable.
Accounts payable is expected to increase by $100,000 and long-term debt is expected to increase
By $300,001. The project has a 5-year life. The fixed assets will belong in a 30% CCA class. At the
End of the project, the fixed assets can be sold for 25% of their original cost. The net working
Capital returns to its original level at the end of the project. The project is expected to generate
Annual sales of $554,000 and costs of $430,001. The tax rate is 35% and the required rate of return
Is 15%.
What is the present value of the CCA tax shield for this project?

• A) $28,438
• B) $37,918
• C) $52,813
• D) $61,462
• E) $81,250

Analyze the importance of personality characteristics and commitment in successful entrepreneurship.

Understand the concept of locus of control and its importance in entrepreneurship.

Compare and contrast the roles and characteristics of entrepreneurs and small business managers.

Grasp the significance of innovation in business growth.

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Definitions:

Guile

The use of clever but usually deceptive methods to achieve one's aims or to manipulate the situation to one's advantage.

Unfair Advantage

An unethical or unjust edge or benefit in a competitive situation that is often gained through exploitation of confidential information or other unethical practices.

Crafty

Exhibiting cleverness or ingenuity, especially in deceiving others.