Tech Enterprises Is Considering a New Project That Will Require

question 93

Multiple Choice

Tech Enterprises is considering a new project that will require $325,000 for fixed assets,$160,000 for inventory,and $35,000 for accounts receivable.Short-term debt is expected to increase by $100,000.The project has a life of 5 years.The fixed assets will be depreciated straight-line to a zero book value over the life of the project.Ignore bonus depreciation.At the end of the project,the fixed assets can be sold for 25 percent of their original cost and the net working capital will return to its original level.The project is expected to generate annual sales of $554,000 with costs of $430,000.The tax rate is 21 percent and the required rate of return is 15 percent.What is the net present value of this project?

• A)$32,026.45
• B)$33,278.35
• C)$34,138.25
• D)$32,318.29
• E)$36,202.48

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Definitions:

Standard Errors

The standard deviation of the sampling distribution of a statistic, often used to measure the precision of sample estimates.

Face-to-face

Direct interaction between individuals in the same physical space, typically involving conversation or visual contact.

Alternative Hypothesis

In hypothesis testing, it is the hypothesis that is considered if there is sufficient evidence to reject the null hypothesis; it proposes a specific relationship between variables.

Graduate Students

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