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

Estimate changes in labor costs and production time based on variations in learning rates.

Calculate the production capacity within time and labor constraints.

Set pricing based on learning curves and cost-plus pricing strategies.

Understand the concept of a learning curve and its application in time and cost estimation.

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Definitions:

R&D Spending

The amount of money that a company allocates towards research and development to innovate or improve its products or services.

Money Supply

The total amount of monetary assets available within an economy at a specific time.

Prices

The amount of money required to purchase goods or services.

Inflation Rate

The pace at which the average cost of goods and services increases, leading to a reduction in buying power.