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

question 47

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 3, the initial outlay equals ________. (See Table 11.4)

• A) $170,400
• B) $211,000
• C) $196,000
• D) $300,000

---

Definitions:

DSM

Short for Diagnostic and Statistical Manual of Mental Disorders, it is a handbook used by healthcare professionals as the authoritative guide to diagnose mental disorders.

Cigarette Smoking

The act of inhaling and exhaling the smoke of burning tobacco encased in cigarettes, often leading to addiction and health risks.

Gambling Disorder

A behavioral addiction characterized by a continuous or periodic loss of control over gambling, preoccupation with gambling and money with which to gamble, irrational thinking, and a continuation of the behavior despite adverse consequences.

Cocaine

A powerful stimulant drug derived from the leaves of the coca plant, known for its addictive potential.