Table 11.2 Computer Disk Duplicators, Inc. Has Been Considering Several Capital Investment

question 29

Multiple Choice

Table 11.2
Computer Disk Duplicators, Inc. has been considering several capital investment proposals for the year beginning in 2014. For each investment proposal, the relevant cash flows and other relevant financial data are summarized in the table below. In the case of a replacement decision, the total installed cost of the equipment will be partially offset by the sale of existing equipment. The firm is subject to a 40 percent tax rate on ordinary income and on long-term capital gains. The firm's cost of capital is 15 percent.
________________________________________________________ *Not applicable
-For Proposal 1, the annual incremental after-tax cash flow from operations for year 1 is ________. (See Table 11.2)

• A) $60,000
• B) $255,000
• C) $300,000
• D) $210,000

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Definitions:

Reach A Decision

The process of arriving at a conclusive choice among various options or courses of action.

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The essential skills and abilities required as a basis for further development in a profession or field.

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The science of colors, including their properties, classifications, and the way they interact with light.