A 6-Year Project Has Expected Sales of 2,000 Units,±4 Percent

question 7

Multiple Choice

A 6-year project has expected sales of 2,000 units,±4 percent.The expected variable cost per unit is $8,and the expected fixed costs are $9,800.The fixed and variable cost estimates are considered accurate within a range of ±2 percent.The sales price is estimated at $22 a unit,±3 percent.The project requires an initial investment of $42,000 for equipment that will be depreciated straight-line to zero over the project's life.The equipment has a pretax salvage value of $5,000 at the end of the project.The project requires $2,600 in net working capital during its life.The discount rate is 9 percent,and tax rate is 30 percent.What is the net present value for the optimistic scenario?

• A)$35,096.52
• B)$34,008.12
• C)$28,008.46
• D)$31,490.07
• E)$22,295.33

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Definitions:

Synchronous Speed

The speed at which the magnetic field in an AC machine rotates, determined by the frequency of the supply current and the number of poles in the machine.

Rotor Speed

The rotational speed of the rotor in a motor or generator, usually measured in revolutions per minute (RPM).

Stator Speed

The rotation speed of the stator, which is a stationary component of electromagnetic circuits in motors or generators.

Slip Speed

The difference in speed between the rotor of an induction motor and the actual magnetic field's speed.