Ajax Corporation Is Planning a 10 Year Project That Will

question 58

Multiple Choice

Ajax Corporation is planning a 10 year project that will have an initial cost of $500,000.During the first 2 years, there will be cash outflows of $40,000.Years 3-6 will see cash inflows of $120,000.Years 7-10 will see cash inflows of $200,000.If the company's required rate of return is 9%, determine the NPV of the project.

• A)$143,200
• B)$225,650
• C)$375,800
• D)$500,000 Using the BAII Plus Calculator:

---

Definitions:

Direct Labor

The work of factory employees that can be directly associated with converting raw materials into finished goods.

Total Manufacturing Costs

The aggregate expenses involved in the manufacture of products, including direct materials, direct labor, and manufacturing overhead.

Work In Process Inventory

Goods partially completed during the manufacturing process; not yet finished products.

Cost of Goods Manufactured

The total production cost of goods completed and transferred out of a manufacturing department during a period.