Story Company Is Investing in a Giant Crane

question 22

Multiple Choice

Story Company is investing in a giant crane.It is expected to cost $6.0 million in initial investment,and it is expected to generate an end-of-year after-tax cash flow of $3.0 million each year for three years.Calculate the NPV at 12%.

• A)$2.4 million
• B)$1.2 million
• C)$0.80 million
• D)$0.20 million

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Definitions:

Overhauling

The comprehensive process of inspecting, cleaning, repairing, and replacing necessary parts of machinery, vehicles, or equipment.

Large Truck

A large vehicle used for transporting goods and materials, typically defined by its significant cargo capacity and heavyweight classification.

Intangible Assets

Assets that are not physical in nature, such as copyrights, patents, and trademarks, which have value for a business.

Patent

An exclusive right granted for an invention, which allows the patent holder to exclude others from making, using, or selling the invention for a certain period of time.