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

question 109

Multiple Choice

Table 11.2
Computer Disk Duplicators, Inc. has been considering several capital investment proposals for the year beginning in 2004. 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 2, the book value of the existing asset is ________. (See Table 11.2)

• A) $13,600
• B) $34,400
• C) $66,400
• D) $80,000

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Definitions:

Outbound Telemarketing

A marketing strategy where a company initiates calls to potential customers to sell products or services.

Sales Call

A communication, usually via telephone or in person, initiated by a sales representative to pitch a product or service to a potential customer.

Business Customer

A client who purchases goods or services for business use, as opposed to an individual consumer buying for personal use.

Sales Representative

A professional responsible for selling products or services on behalf of a company, often directly interacting with customers to reach sales targets.