A New 5-Year Project Has Expected Sales of 3,400 Units,±

question 46

Multiple Choice

A new 5-year project has expected sales of 3,400 units,± 8 percent; variable costs per unit of $22,± 2%; annual fixed costs of $47,500,± 2 percent; annual depreciation of $33,000; and a sale price of $45 a unit,± 3 percent.The project initially requires $165,000 of fixed assets and $42,000 of net working capital.At the end of the project,the net working capital will be recouped and the fixed assets will produce an aftertax cash inflow of $35,000.The tax rate is 21 percent and the discount rate is 14 percent.What is the net present value of the optimistic scenario?

• A)−$28,026.15
• B)−$28,799.24
• C)−$22,584.66
• D)$21,202.98
• E)$18,566.01

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Definitions:

Maculae

Maculae are small, specialized regions in the sensory epithelia, notably in the vestibular system of the ear and the retina, involved in detecting balance and visual changes respectively.

Cristae

The folds of the inner membrane of mitochondria, where the electron transport chain takes place.

Compressed Regions

Areas where tissue, organs, or structures are pressed together or compacted, often leading to reduced function or pain.

Hertz

A unit of frequency equivalent to one cycle per second, used to measure the frequency of sound waves and electrical signals.