Use the Information for the Question(s)below

question 88

Multiple Choice

Use the information for the question(s) below.
The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years. The cost of the machine is $30 000 and the machine will be depreciated by the straight-line method over its three-year life to a residual value of $0.
The cane manufacturing machine will result in sales of 2 000 canes in year 1. Sales are estimated to grow by 10% per year for each of the three years. The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant. The canes have a cost per unit to manufacture of $9 each.
Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts. It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its annual sales in accounts receivable, 9% of its annual sales in inventory, and 5% of its annual sales in accounts payable. The firm is in the 30% tax bracket and has a cost of capital of 10%.
-Which of the following adjustments should NOT be made when computing free cash flow from incremental earnings?

• A)subtracting all non-cash expenses
• B)adding depreciation
• C)subtracting depreciation expenses from taxable earnings
• D)subtracting increases in Net Working Capital

Analyze the relationship between bureaucracies and the executive, legislative, and judicial branches of government.

Understand the historical development and significance of the civil service system.

Describe the impact of specific laws and acts on the organization and behavior of bureaucracies.

Identify the components and models of bureaucracy as analyzed by sociologists and political scientists.

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Definitions:

P/E Ratio

Stands for Price-to-Earnings Ratio, which measures a company's current share price relative to its per-share earnings, often used to gauge valuation.

Dividend Discount Model

A method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.

Financial Statements

Papers that offer a summary of a company's financial status, encompassing the balance sheet, income statement, and cash flow statement.

ROA

Return on Assets, a financial ratio indicating how profitable a company is relative to its total assets, used to assess how efficient a company's management is at using its assets.