Keyser Mining Is Considering a Project That Will Require the Purchase

question 102

Multiple Choice

Keyser Mining is considering a project that will require the purchase of $980,000 in new equipment.The equipment will be depreciated straight-line to a zero book value over the 7-year life of the project.The equipment can be scraped at the end of the project for 5 percent of its original cost.Annual sales from this project are estimated at $420,000.Net working capital equal to 20 percent of sales will be required to support the project.All of the net working capital will be recouped.The required return is 16 percent and the tax rate is 35 percent.What is the amount of the aftertax salvage value of the equipment?

• A)$17,150
• B)$31,850
• C)$118,800
• D)$237,600
• E)$343,000

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Definitions:

Social Learning Theory

A theory that proposes individuals learn behaviors, norms, and values by observing and imitating others, especially those seen as role models.

Observing

The act of carefully watching and analyzing behaviors, events, or phenomena to gain information or understanding.

Out-of-School Suspension

A disciplinary measure where a student is temporarily removed from their regular educational setting for behavioral reasons.

Reinforcement

In operant conditioning, a consequence applied to increase the likelihood of a behavior occurring again.