You Are Evaluating a Project for the Ultimate Recreational Tennis

question 19

Multiple Choice

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $300 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a three-year life. Variable costs amount to $200 per unit and fixed costs are $50,000 per year. The project requires an initial investment of $150,000 in assets that will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $25,000. NWC requirements at the beginning of each year will be approximately 10 percent of the projected sales during the coming year. The tax rate is 30 percent and the required return on the project is 10 percent. What will the free cash flow for this project be in year 2?

• A)$94,450
• B)$49,950
• C)$102,450
• D)$65,250

Understand the guidelines for leading decision group meetings.

Recognize the importance of emphasizing common interests and values in group leadership.

Comprehend factors influencing team performance beyond member motivation and skills.

Appreciate the significance of social interaction in group dynamics.

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Definitions:

Hostile Reaction

A negative response expressed with anger, opposition, or resentment, often in reaction to a perceived threat or insult.

Message Sequence

Message sequence refers to the order in which messages or pieces of information are delivered or presented, particularly in communication contexts.

Negative Message

Communication conveying unpleasant news, rejections, or criticisms in a way that aims to preserve goodwill.

Bad News

Unfavorable or distressing information that needs to be communicated.