(Appendix 13C) Boynes Corporation Is Considering a Capital Budgeting Project

question 64

Multiple Choice

(Appendix 13C) Boynes Corporation is considering a capital budgeting project that would require investing $200,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $490,000 and annual incremental cash operating expenses would be $330,000. The project would also require an immediate investment in working capital of $10,000 which would be released for use elsewhere at the end of the project. The project would also require a one-time renovation cost of $70,000 in year 3. The company's income tax rate is 30% and its after-tax discount rate is 14%. The company uses straight-line depreciation. 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) $259,000
• B) $126,876
• C) $214,750
• D) $132,796

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Definitions:

Brain Connectome

Map of the complete structural and functional fiber pathways of the human brain in vivo.

Fiber Pathways

Bundles of neuronal axons within the nervous system that transmit information between different areas of the brain or body.

Insular Cortex

A region of the brain's cerebral cortex involved in diverse functions including perception, self-awareness, and regulating the body's homeostasis.

Right Parietal

The right parietal lobe is a region in the brain involved in processing spatial orientation, recognition, and movement coordination, contributing to our understanding of our environment.