Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 30

Multiple Choice

Use the information below to answer the following questions.
Han Ltd supplies chilli paste to large supermarket chains. The company is currently considering scrapping the old processor and investing in a new processor. Information about the investment is as follows: $$\begin{array} { l r } \text { Initial investment in processor } & \$ 105,000 \\\text { Operating cash flows over next 5 years: } & \\\quad \text { Cash receipts } & \$ 80,000 \\\quad \text { Cash payments } & \$ 40,000 \\\text { Residual value of processor in 5 years } & \$ 5,000 \\\text { Required rate of return } & 8 \% \\\text { Depreciation per antum } & \$ 20,000\end{array}$$
-Refer to the table above. What is the annual net cash flow for years 1-4?

• A)$10,000.
• B)$30,000.
• C)$40,000.
• D)$20,000.

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Definitions:

Inputs

Resources used in the production process to produce goods or services.

Production

The process of creating goods or services using inputs such as labor, materials, and technology.

Spreading Effect

refers to the phenomenon where the impact of a particular event, policy, or action extends or disperses across a wider area or population.

Diminishing Returns

An axiom indicating that beyond a certain level, additional investments in a given domain will not yield proportionally higher returns unless other variables are adjusted.