Stu Is Working on a Bid for a Contract

question 65

Multiple Choice

Stu is working on a bid for a contract.Thus far,he has determined that he will need $218,000 for fixed assets and another $41,000 for net working capital at Time 0.He has also determined that he can recover $79,900 aftertax for the combined fixed assets and net working capital at the end of the 3-year project.What operating cash flow will be required each year for the project to return 14 percent in nominal terms?

• A)$116,079.42
• B)$97,487.79
• C)$110,220.48
• D)$88,330.01
• E)$113,360.69

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Definitions:

Assessed Value

The valuation determined by a public tax assessor for the purpose of levying property taxes.

PST

Provincial Sales Tax, a tax levied by some provinces in Canada on the sale of goods and services.

GST

A tax on goods and services meant for domestic consumption, the Goods and Services Tax is a value-added tax charged on most products and services.

Grade Point Average

A numerical calculation that represents the average value of the accumulated final grades earned in courses over time, standardized on a scale.