You Are Evaluating a Project for Your Company

question 119

Multiple Choice

You are evaluating a project for your company. You estimate the sales price to be $25 per unit and sales volume to be 4,000 units in year 1; 7,000 units in year 2; and 1,000 units in year 3. The project has a three-year life. Variable costs amount to $10 per unit and fixed costs are $50,000 per year. The project requires an initial investment of $10,000 in assets that will be depreciated straight-line to zero over the three-year project life. The actual market value of these assets at the end of year 3 is expected to be $1,000. NWC requirements at the beginning of each year will be approximately 10 percent of the projected sales during the coming year. The tax rate is 34 percent and the required return on the project is 10 percent. What change in NWC occurs at the end of year 1?

• A)$1,750
• B)$7,500
• C)$11,550
• D)$17,500

---

Definitions:

Sterile Team Member

A healthcare professional involved in a surgical procedure who has undergone specific preparation to maintain sterility in order to prevent infection.

Antimicrobial Agent

An antimicrobial agent is a substance that kills or inhibits the growth of microorganisms, including bacteria, viruses, fungi, and parasites, used in medications and cleaning products.

Resident Microbial Count

The number of microorganisms that permanently inhabit a particular site or body part, often serving vital roles in maintaining health.

Chipped Nails

Small breaks or fractures on the edges of fingernails or toenails, often caused by trauma or lack of proper nail care.