(Appendix 13C) Stockinger Corporation Has Provided the Following Information Concerning

question 30

Multiple Choice

(Appendix 13C) Stockinger Corporation has provided the following information concerning a capital budgeting project:
$\begin{array}{lr}\text {Investment requiredin equipment. }&\$280,000\\\text {Expected life of the project. }&4\\\text { Salvage value of equipment. }&\$0\\\text { Annual sales.}&\$580,000\\\text {Annual cash operating expenses }&\$420,000\\\text {Working capital requirement. }&\$30,000\\\text {One-time renovation expense in year 3}&\$80,000\\\end{array}$
The company's income tax rate is 35% and its after-tax discount rate is 11%. The working capital would be required immediately and would be released for use elsewhere at the end of the project. The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting.
-The net present value of the entire project is closest to:

• A) $182,000
• B) $50,724
• C) $70,494
• D) $147,770

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Definitions:

Afferent;efferent

Afferent refers to conducting signals towards a central point (e.g., nerves that carry sensory information to the brain), while efferent refers to conducting signals away from a central point (e.g., nerves that carry motor signals from the brain to muscles).

Nervous System

The network of nerve cells and fibers that transmits nerve impulses between parts of the body, governing both voluntary actions and involuntary responses.

Electrochemical Communication

The process by which neurons communicate with each other, involving electrical signals within neurons and chemical signals (neurotransmitters) between neurons.

Neurons

Electrically excitable cells in the nervous system that process and transmit information through electrical and chemical signals.