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

question 44

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 2, the initial outlay equals ________. (See Table 11.2)

• A) $120,720 cash outflow
• B) $164,560 cash outflow
• C) $150,000 cash outflow
• D) $167,520 cash outflow

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Definitions:

Recreation

Activities done for enjoyment, leisure, or relaxation outside of one's regular duties or work.

Leisure

Free time when one is not working or attending to other duties, often used for relaxation, entertainment, or hobbies.

High Culture

Forms of cultural expression associated with the elite or well-educated segments of society, including classical music, fine arts, and literature.

Low Culture

Refers to cultural products considered to have less sophistication or value by a society's mainstream standards, often contrasted with "high culture."