Thornley Co

question 1

Multiple Choice

Thornley Co.is considering a 3-year project with an initial cost of $636,000.The equipment is classified as MACRS 7-year property.The MACRS table values are 0.1429,0.2449,0.1749,0.1249,0.0893,0.0892,0.0893,and 0.0446 for Years 1 to 8,respectively.At the end of the project,the equipment will be sold for an estimated $279,000.The tax rate is 35 percent,and the required return is 17 percent.An extra $23,000 of inventory will be required for the life of the project.Annual sales are estimated at $379,000 with costs of $247,000.What is the total cash flow for Year 3?

• A)$281,782.87
• B)$406,208.19
• C)$315,189.32
• D)$319,208.19
• E)$423,008.24

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Definitions:

Opposite Direction

A direction or course that is diametrically different from another, often implying a contrary or reverse movement.

Distance Cues

Visual or auditory information that helps an organism perceive the distance to an object or sound source.

Horizon Moon

Reflects the visual phenomenon when the moon appears larger near the horizon than it does higher up in the sky.

Depth Cue

Visual information that allows a person to judge the distance and 3D characteristics of an object, including factors such as lighting, perspective, and overlap.