A Firm Is Considering a New Project That Will Generate

question 85

Multiple Choice

A firm is considering a new project that will generate cash revenue of $1,000,000 and cash expenses of $700,000 per year for five years.The equipment necessary for the project will cost $200,000 and will be depreciated straight line over four years.What is the expected free cash flow in the second year of the project if the firm's marginal tax rate is 35%?

• A)$195,000
• B)$162,500
• C)$212,500
• D)$245,000

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Definitions:

Ergonomics

The science of designing the workplace, keeping in mind the capabilities and limitations of the worker, to improve safety and productivity.

Employee Workstation

A designated area in a workplace equipped for a specific employee to perform their job, often including necessary tools and technology.

Hackman And Oldham

Creators of the Job Characteristics Model, which suggests that job satisfaction and performance improve when jobs are redesigned to enhance autonomy, feedback, skill variety, task identity, and task significance.

Job Design

The process of organizing work into the tasks required to perform a specific job. It involves the determination of individual job tasks and responsibilities.