A Project Has an Annual Operating Cash Flow of $52,620

question 57

Multiple Choice

A project has an annual operating cash flow of $52,620.Initially,this four-year project required $5,160 in net working capital,which is recoverable when the project ends.The firm also spent $39,700 on equipment to start the project.This equipment will have a book value of $17,014 at the end of Year 4.What is the cash flow for Year 4 of the project if the equipment can be sold or $15,900 and the tax rate is 35 percent?

• A)-$74,069.90
• B)$73,680.00
• C)$74,069.90
• D)$73,862.00
• E)$73,290.10

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Definitions:

Budget Constraint

The limitation on the consumption choices of an individual or family based on their income and the prices of goods and services.

Indifference Curve

A graph representing combinations of goods or services among which an individual is equally satisfied.

Equally Affordable

A condition where different goods or services have the same cost in terms of their value to a consumer, making them equally desirable.

Indifference Curves

Graphical representations in economics showing different combinations of two goods among which a consumer is indifferent in terms of utility or satisfaction.