Kaneb Is Evaluating Two Alternative Pipeline Welders

question 15

Multiple Choice

Kaneb is evaluating two alternative pipeline welders.Welder A costs $310,000, has a 7 year life, and is expected to generate net cash inflows of $78,000 in each of the 7 years.Welder B costs $320,000, has a 5 year life, and is expected to generate annual net cash inflows of $68,900 in each of the 5 years.Kaneb's cost of capital is 16%.Using the equivalent annual annuity method, which alternative should be chosen and what is its NPV?

• A)B, $4,920
• B)A, $7,111
• C)B, $10,650
• D)A, $7,800

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Definitions:

Sexual Harassment

Constitutes unwanted or inappropriate sexual comments or advances, often creating a hostile or offensive environment.

Hostile Environment Harassment

Unwelcome behavior in a workplace or educational setting that makes the environment intimidating, hostile, or offensive for individuals.

Quid Pro Quo Harassment

involves a situation where job benefits are conditioned on sexual favors, or employment decisions are based on an individual's submission to or rejection of such advances.

Benevolent Sexism

A form of sexism characterized by attitudes that idealize women for traditional qualities and roles, ostensibly "protecting" them, but ultimately serving to keep them in subordinate positions.