Thomson Media Is Considering Some New Equipment Whose Data Are

question 42

Multiple Choice

Thomson Media is considering some new equipment whose data are shown below.The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years,but it would have a positive pre-tax salvage value at the end of Year 3,when the project would be closed down.Also,additional net operating working capital would be required,but it would be recovered at the end of the project's life.Revenues and other operating costs are expected to be constant over the project's 3-year life.What is the project's NPV?

• A)$20,762
• B)$21,854
• C)$23,005
• D)$24,155
• E)$25,363

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Definitions:

Chloroplasts

Organelles found in the cells of green plants and photosynthetic algae, where photosynthesis takes place, converting light energy into chemical energy.

Photosynthesis

The process by which green plants and certain other organisms transform light energy, usually from the sun, into chemical energy stored in glucose.

Rough Endoplasmic Reticulum

A network of membrane-bound tubules and sacs studded with ribosomes, involved in the synthesis and export of proteins.

Lysosome

Membrane-bound vesicle that contains hydrolytic enzymes for digesting macromolecules and bacteria; used to recycle worn-out cellular organelles.