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:

Empirical Studies

Research conducted through direct observation or experience, aiming to validate hypotheses or understand phenomena.

Mental Breaks

Short periods of rest or distraction taken during intense periods of mental activity to improve focus and productivity.

Functional Fixedness

A mental bias that confines an individual to utilizing an item solely in its conventional manner.

Mental Set

A framework for thinking about a problem, based on previous experiences and successes, that can both aid and hinder problem-solving.