Colors and More Is Considering Replacing the Equipment It Uses

question 93

Multiple Choice

Colors and More is considering replacing the equipment it uses to produce crayons.The equipment would cost $1.37 million,have a 12-year life,and lower manufacturing costs by an estimated $310,000 a year.The equipment will be depreciated using straight-line depreciation to a book value of zero.The required rate of return is 15 percent and the tax rate is 35 percent.What is the net income from this proposed project?

• A)$18,508.75
• B)$40,211.24
• C)$66,441.67
• D)$127,291.67
• E)$136,709.48

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Definitions:

Implantation

The process by which a fertilized egg attaches to the lining of the uterus to begin pregnancy.

Blastocyst

Mammalian blastula.

Anterior Pituitary

The front portion of the pituitary gland that secretes hormones responsible for regulating a wide range of biological functions, including growth, metabolism, and reproductive processes.

FSH

Follicle-stimulating hormone, a gonadotropin involved in the regulation of reproductive processes.