Gateway Communications Is Considering a Project with an Initial Fixed

question 91

Multiple Choice

Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a zero book value over the 10-year life of the project.At the end of the project the equipment will be sold for an estimated $300,000.The project will not directly produce any sales but will reduce operating costs by $725,000 a year.The tax rate is 35 percent.The project will require $45,000 of inventory which will be recouped when the project ends.Should this project be implemented if the firm requires a 14 percent rate of return? Why or why not?

• A)No; The NPV is -$172,937.49.
• B)No; The NPV is -$87,820.48.
• C)Yes; The NPV is $251,860.34.
• D)Yes; The NPV is $387,516.67.
• E)Yes; The NPV is $466,940.57.

Recognize the adaptations of an accounting system to meet specific business needs, including sales taxes and enterprise resource planning (ERP).

Understand the principles guiding the design and operation of accounting information systems.

Understand how to use wildcards for pattern matching in queries.

Know how to combine criteria using AND in query design.

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Definitions:

Serve The Same Customers

The practice of targeting and catering to the same client base by different businesses or services.

FLSA

The Fair Labor Standards Act, a U.S. law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards.

Nonexempt Employee

An employee who is covered by the Fair Labor Standards Act (FLSA) and is eligible for overtime pay for hours worked beyond a standard workweek.

Hourly Paid

A method of compensation based on the number of hours worked.