Use the Table for the Question(s)below

question 69

Multiple Choice

Use the table for the question(s) below.

-Panjandrum Industries,a manufacturer of industrial piping,is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems.It has made the above estimates of free cash flows resulting from such a decision (all quantities in millions of dollars) .There are some concerns that estimates of manufacturing expenses may be low,due to the rising cost of raw materials.What is the break-even point for manufacturing expenses,if all other estimates are correct and the cost of capital is 10%?

• A)$0.78 million
• B)$0.88 million
• C)$0.97 million
• D)$1.22 million
• E)$1.36 million

Understand the tax implications of asset disposal and how depreciation methods affect tax calculations.

Identify the limitations of the payback method and how it ranks investment proposals.

Appreciate the significance of time value of money in evaluating investment decisions and savings.

Understand the process and benefits of post-audits in capital investment projects.