Jasper Metals Is Considering Installing a New Molding Machine Which

question 24

Multiple Choice

Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $73,000 a year for 7 years.At the beginning of the project,inventory will decrease by $16,000,accounts receivables will increase by $21,000,and accounts payable will increase by $15,000.All net working capital will be recovered at the end of the project.The initial cost of the molding machine is $249,000.The equipment will be depreciated straight-line to a zero book value over the life of the project.The equipment will be salvaged at the end of the project creating a $48,000 aftertax cash flow.At the end of the project,net working capital will return to its normal level.What is the net present value of this project given a required return of 14.5 percent?

• A)$77,211.20
• B)$79,418.80
• C)$82,336.01
• D)$84,049.74
• E)$87,925.54

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Definitions:

Chromosome

The structure that transmits the genetic material from one generation to the next; composed of condensed chromatin; each species has a particular number of chromosomes that is passed on to the next generation.

Gene

A unit of heredity that is transferred from a parent to offspring and is held to determine some characteristic of the offspring.

Enzyme

Biological molecules that significantly speed up the rate of virtually all of the chemical reactions that take place within cells.

Protein

Large, complex molecules made up of amino acids that perform a wide range of functions in the body, including structural support, catalyzing metabolic reactions, and immune response.