Your Company Is Considering the Replacement of an Old Delivery

question 90

Multiple Choice

Your company is considering the replacement of an old delivery van with a new one that is more efficient.The old van cost $40,000 when it was purchased 5 years ago.The old van is being depreciated using the simplified straight-line method over a useful life of 8 years.The old van could be sold today for $7,000.The new van has an invoice price of $80,000,and it will cost $6,000 to modify the van to carry the company's products.Cost savings from use of the new van are expected to be $28,000 per year for 5 years,at which time the van will be sold for its estimated salvage value of $18,000.The new van will be depreciated using the simplified straight-line method over its 5-year useful life.The company's tax rate is 35%.Working capital is expected to increase by $5,000 at the inception of the project,but this amount will be recaptured at the end of year five.What is the terminal cash flow?

• A) $23,000
• B) $18,000
• C) $17,250
• D) $16,700

---

Definitions:

Psychotherapy

A form of treatment aimed at improving mental health and well-being by discussing and exploring issues with a trained therapist.

Older Adults

Individuals who are in the later phase of their life, often defined as being 65 years of age or older, focusing on aspects related to aging and senior living.

Cerebrovascular Damage

Refers to injury or harm to the blood vessels in the brain, potentially leading to stroke or other neurological impairments.

Neurocognitive Disorder

A category of mental health disorders that primarily affect cognitive abilities including memory, problem-solving, and attention.