Western Tech Is Considering a New Project That Will Require

question 63

Multiple Choice

Western Tech is considering a new project that will require $118,000 of fixed assets and net working capital of $16,000.The fixed assets will be depreciated on a straight-line basis to a zero salvage value over three years.Ignore bonus depreciation.This project is expected to produce an operating cash flow of $45,000 the first year with that amount decreasing by 5 percent annually for two years before the project is shut down.The fixed assets can be sold for $55,000 at the end of the project and all net working capital will be recovered.What is the net present value of this project at a discount rate of 11.5 percent and a tax rate of 23 percent?

• A)$3,209.17
• B)$15,311.09
• C)$12,136.54
• D)−$3,770.30
• E)−$5,456.32

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Definitions:

Gynecology

A medical practice dealing with the health of the female reproductive systems (vagina, uterus, and ovaries) and the breasts.

Prenatal

Pertaining to the period or development before birth.

Oogenesis

The process of egg cell (ovum) production in females, which occurs in the ovaries.

-genesis

A suffix in biology and medicine indicating the formation, production, or origin of something.