Bruno's Lunch Counter Is Expanding and Expects Operating Cash Flows

question 90

Multiple Choice

Bruno's Lunch Counter is expanding and expects operating cash flows of $29,000 a year for 4 years as a result.This expansion requires $39,000 in new fixed assets.These assets will be worthless at the end of the project.In addition,the project requires $3,000 of net working capital throughout the life of the project.What is the net present value of this expansion project at a required rate of return of 15 percent?

• A)$18,477.29
• B)$21,033.33
• C)$28,288.70
• D)$29,416.08
• E)$42,509.63

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Definitions:

Rebate Check

A refund or discount on products or services, often sent to consumers in the form of a check after a purchase.

Bearer

A term referring to an individual or entity that possesses a negotiable instrument, like a check or bond, and has the right to receive the funds or assets it represents.

Payee

The person or entity to whom a payment is to be made or credited.

Parts Warehouse

A storage facility specialized in storing spare parts for various types of machinery or vehicles.