A Project Will Produce Operating Cash Flows of $39,000 a Year

question 58

Multiple Choice

A project will produce operating cash flows of $39,000 a year for 4 years.During the life of the project,inventory will be lowered by $9,000,accounts receivable will increase by $14,000,and accounts payable will increase by $11,000.The project requires $118,000 of new equipment that will be depreciated straight-line to a zero book value over 4 years.At the end of the project,net working capital will return to its normal level and the equipment will be sold for $21,000,aftertaxes.What is the net present value given a required return of 13 percent?

• A)$14,322.49
• B)$13,483.48
• C)$18,117.05
• D)$13,204.16
• E)$12,804.42

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Definitions:

Biologically-Based Standards

Guidelines or criteria that are grounded in biological characteristics or processes.

Facial Features

The distinct characteristics or attributes of a person's face, which can include shape, expressions, and other physical traits.

Symmetry

The quality of being made up of exactly similar parts facing each other or around an axis; often associated with harmony and balance in design or form.

Mere Exposure Effect

Repeated exposure to an object results in greater attraction to that object.