Bruno's Lunch Counter Is Expanding and Expects Operating Cash Flows

question 90

Multiple Choice

Bruno's Lunch Counter is expanding and expects operating cash flows of $29,000 a year for 4 years as a result.This expansion requires $39,000 in new fixed assets.These assets will be worthless at the end of the project.In addition,the project requires $3,000 of net working capital throughout the life of the project.What is the net present value of this expansion project at a required rate of return of 15 percent?

• A)$18,477.29
• B)$21,033.33
• C)$28,288.70
• D)$29,416.08
• E)$42,509.63

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Definitions:

Chapter 7

A provision under the U.S. Bankruptcy Code allowing individuals or businesses to liquidate their assets to pay off creditors as part of a bankruptcy proceeding.

Railroads

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Conserve And Administer

The act of preserving resources or assets and managing them responsibly for current and future use.

Chapter 11

A chapter of the U.S. Bankruptcy Code allowing a business to continue operations while reorganizing its debts under court supervision.