Floyd Manufacturing Purchased an Asset Costing $50 000

question 86

Multiple Choice

Floyd Manufacturing purchased an asset costing $50 000.Annual operating cash inflows are expected to be $11 000 each year for eight years.No salvage value is expected at the end of the asset's life.Assuming Floyd's cost of capital is 12 per cent,what is the asset's net present value? (ignore income taxes)

• A) $ 4443
• B) $ 4644
• C) $ 4560
• D) $16 560

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Definitions:

Ultra Vires Defense

A legal defense arguing that a corporation acted beyond the scope of its powers as defined in its charter or laws.

State's Attorney General

The chief legal advisor and law enforcement officer of a state or territory, responsible for representing the public interest and prosecuting legal actions.

Shareholder

An individual or entity that owns one or more shares of stock in a corporation, giving them certain rights and interests in the company.

Strict Liability

A legal doctrine that holds a party responsible for their actions without the need to prove fault or negligence.