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

question 78

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 3, the book value of the existing asset is ________. (See Table 11.2)

• A) $21,000
• B) $43,000
• C) $52,000
• D) $80,000

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Definitions:

Target Commitment

A state in which individuals or groups are wholly dedicated to achieving a specific goal.

Personal Appeal

Refers to the charismatic and attractive qualities of an individual that make them likable or persuasive to others.

Power Sources

The origins or bases from which an individual or organization draws the ability to influence others.

Position Power

denotes the authority and influence an individual holds in an organization due to their official role or position, rather than personal characteristics.