A Fast-Food Company Invests $2

question 47

Multiple Choice

A fast-food company invests $2.4 million to buy machines for making slurpies.These can be depreciated using the MACRS schedule shown above.If the cost of capital is 10%,what is the increase in the net present value (NPV) of the product gained by using MACRS depreciation over straight-line depreciation for three years?

• A)$34,452
• B)$66,782
• C)$78,084
• D)$207,702

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Definitions:

Authority

The legitimate power given to an individual or a body to make decisions and enforce obedience.

Power

The capacity or ability to direct or influence the behavior of others or the course of events.

Operative

Relating to or involved in the functioning of operations or activities within an organization or system.

Will

The mental faculty by which one deliberately chooses or decides upon a course of action; determination or drive.