Fitzgerald Computers Is Considering a New Project Whose Data Are

question 13

Multiple Choice

Fitzgerald Computers is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow?
$\begin{array} { l r } \text { Equpment cost (depreciable basis) } & \text { \$65,000 } \\\text { Staight-line depreciation rate } & 33.333 \% \\\text { Sales revenue5, each year } & \text { \$60,000 } \\\text { Operating casts (excl. deprec.) } & 35,000 \\\text { Ter rate } & 35.0 \%\end{array}$

• A) $28,115
• B) $28,836
• C) $29,575
• D) $30,333
• E) $31,092

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Definitions:

Subconscious Processing

Mental processes occurring without conscious awareness, influencing perceptions, thoughts, and behaviors.

Multitask

The ability to perform more than one task or activity over a short period, often by switching focus from one task to another.

Prototype

An original model or first form of something from which other forms are copied or developed, often used in the context of design and innovation.

Heuristic

A problem-solving strategy using a practical method or various shortcuts to produce solutions that may not be optimal but are sufficient for reaching immediate goals.