A Company Is Planning to Invest in a Project,which Requires

question 102

Multiple Choice

A company is planning to invest in a project,which requires the purchase of capital assets of $200,000 and additional net working capital of $20,000.The assets have a five-year life,a CCA rate of 30 percent,and an expected salvage value of $35,000.The annual costs for the project's operations are $50,000.The company's effective tax rate is 40 percent and the cost of capital is 12 percent.Assume the asset class remains open after the assets are sold.What is the break-even pre-tax annual operating revenue?

• A) $114,907
• B) $38,944
• C) $64,907
• D) $140,384

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