Western Electronics (WE) Is Reviewing the Following Data Relating to a New

question 46

Multiple Choice

Western Electronics (WE) is reviewing the following data relating to a new equipment proposal: $\begin{array}{|l|c|}\hline \text { Net initial investment } & \$ 50,000 \\\hline \text { After-tax cash inflow from disposal of the investment after } 5 \text { years } & \$ 10,000 \\\hline \text { Present value of an annuity of } \$ 1 \text { at } 12 \% \text { for } 5 \text { years } & 3.605 \\\hline \text { Present value of } \$ 1 \text { at } 12 \% \text { in } 5 \text { years } & 0.567 \\\hline\end{array}$ WE expects the net after-tax savings in cash outflows from the investment to be equal in each of the 5 years.What is the minimum amount of after-tax annual savings (including depreciation effects) needed to make the investment yield a 12% return (rounded to the nearest whole dollar) ?

• A)$8,189.
• B)$11,111.
• C)$12,297.
• D)$13,889.
• E)$15,678.

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Definitions:

Output Word

A group of binary digits or bits that are treated as a single unit of output data, commonly used in digital electronics and computing.

Mechanical Sequencer Switches

Devices used to sequence operations or actions, typically in an automated or industrial setting.

Drum Switches

Mechanical switches that can change the state, direction, or operation of electric motors or other machinery, often using a rotating drum to change contact positions.

Sequencer Switches

Sequencer switches are electrical or electronic components that control the sequence in which specific operations or processes occur.