A Project Has an Annual Operating Cash Flow of $45,000

question 56

Multiple Choice

A project has an annual operating cash flow of $45,000.Initially,this four-year project required $3,800 in net working capital,which is recoverable when the project ends.The firm also spent $21,500 on equipment to start the project.This equipment will have a book value of $4,300 at the end of year 4.What is the cash flow for year 4 of the project if the equipment can be sold for $5,400 and the tax rate is 34 percent?

• A)$51,724
• B)$52,038
• C)$53,826
• D)$53,862,900
• E)$53,900

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Definitions:

M2

A measure of the money supply that includes all elements of M1 (cash and checking deposits) plus savings deposits, money market mutual funds, and other time deposits.

M1

A segment of the money supply encompassing all tangible currency, such as bills and coins, in addition to demand deposits, checking accounts, and negotiable order of withdrawal (NOW) accounts.

Credit Cards

Credit cards are payment cards issued to users to enable the cardholder to pay a merchant for goods and services, based on the cardholder's promise to the card issuer to pay them for the amounts plus other agreed charges.

Checkable Deposits

Bank account balances that can be drawn upon by writing a check or using a debit card, functioning as money for everyday transactions.