You Have Been Asked by the President of Your Company

question 67

Multiple Choice

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $50,000.The truck falls into the MACRS three-year class,and it will be sold after three years for $20,000.Use of the truck will require an increase in NWC (spare parts inventory) of $2,000.The truck will have no effect on revenues,but it is expected to save the firm $20,000 per year in before-tax operating costs,mainly labor.The firm's marginal tax rate is 40 percent.What will the free cash flows for this project be?

• A) Year 0 Cash flow: −$50,000; Year 1 Cash flow: $18,666; Year 2 Cash flow: $20,890; Year 3 Cash flow: $28,444
• B) Year 0 Cash flow: −$50,000; Year 1 Cash flow: $18,666; Year 2 Cash flow: $21,890; Year 3 Cash flow: $28,444
• C) Year 0 Cash flow: −$52,500; Year 1 Cash flow: $18,666; Year 2 Cash flow: $20,890; Year 3 Cash flow: $30,944
• D) Year 0 Cash flow: −$52,500; Year 1 Cash flow: $18,666; Year 2 Cash flow: $22,890; Year 3 Cash flow: $30,944

Comprehend strategies for business downsizing and its effects on company structure and operations.

Identify resources available for small business advice and development.

Identify the key demographic segments relevant to market segmentation for small retailers and service providers.

Understand the characteristics and preferences of Generation Y or millennials.

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Definitions:

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A theory proposed by Robert Sternberg that suggests love can be understood in terms of three components: intimacy, passion, and commitment.

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Acts performed as a result of or in expectation of a sexual reward, often highlighting power imbalances or coercion.