The Management of Hansley Corporation Is Investigating an Investment in Equipment

question 395

Multiple Choice

The management of Hansley Corporation is investigating an investment in equipment that would have a useful life of 5 years. The company uses a discount rate of 18% in its capital budgeting. Good estimates are available for the initial investment and the annual cash operating outflows, but not for the annual cash inflows and the salvage value of the equipment. The net present value of the initial investment and the annual cash outflows is -$273,300. (Ignore income taxes.) Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.Ignoring the cash inflows, to the nearest whole dollar how large would the salvage value of the equipment have to be to make the investment in the equipment financially attractive?

• A) $625,400
• B) $1,518,333
• C) $273,300
• D) $49,194

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Definitions:

Cultural Genocide

The deliberate destruction of the cultural heritage, practices, and identity of a group or society, often aimed at erasing its historical presence and integrating its members into a dominating culture.

Segregation

The enforced separation of different racial groups in a country, community, or establishment, often resulting in the use of different facilities or living areas.

Country Of Origin

The country where a person was born or where a product was manufactured or originated from.

Canadian Immigrants

Individuals who have relocated to Canada from another country to live permanently, contributing to the country's cultural, economic, and social diversity.