The Atlantic Company Plans to Open a New Branch Office

question 82

Multiple Choice

The Atlantic Company plans to open a new branch office in a suburban area.The building will cost $200,000 and will be depreciated (on a straight-line basis) over a 20 year life to a $0 estimated salvage value.Equipment for the building will cost an additional $100,000.This equipment has a 20-year life and will be depreciated on a straight-line basis to a $0 estimated salvage value.The branch office is expected to generate additional before tax net income of $30,000 per year.The tax rate is 40 percent and the cost of capital is 12 percent.Compute the net present value for the project.

• A)-$63,523
• B)+$246,477
• C)+$53,523
• D)-$53,523

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Definitions:

Manic Episodes

Periods of abnormally elevated mood, increased activity, and energy levels, often characteristic of bipolar disorder.

Bipolar Disorder

A mental health condition characterized by extreme mood swings that include emotional highs (mania or hypomania) and lows (depression).

Depakote

A medication primarily used to treat epilepsy and bipolar disorder, and to prevent migraine headaches.

Cognitive-Behavioral Therapy

A therapeutic approach that addresses dysfunctional emotions, behaviors, and cognitions through a goal-oriented, systemic process.