Table 11.4 Computer Disk Duplicators, Inc. Has Been Considering Several Capital Investment

question 14

Multiple Choice

Table 11.4
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 initial outlay equals ________. (See Table 11.4)

• 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:

Forming Subgoals

The strategy of breaking down a task into smaller, more manageable tasks in order to facilitate problem-solving.

Algorithm

A step-by-step procedure or formula for solving a problem or accomplishing a task, often used in mathematics and computer science.

Arrangement

The act of organizing or positioning objects or elements in a structured or specific order.

Rearrange

To change the positioning, order, or organization of something.