Use the Information Below to Answer the Following Question(s)

question 182

Multiple Choice

Use the information below to answer the following question(s) .Neptune Ltd.wants to expand its operations by manufacturing a new product line.New equipment will cost $225,000.Incremental sales are estimated at $150,000 per year for 6 years.Variable costs of producing the new product line are 52% of sales and incremental annual fixed costs are $25,000.The equipment can be salvaged after 6 years for 16% of its original cost.The company's required rate of return for new projects is 18%.Ignore income taxes.
-Net present value is calculated using the

• A)internal rate of return.
• B)required rate of return.
• C)rate of return required by the investment bankers.
• D)after tax cost of debt.
• E)coupon interest rate on the firm's debt.

---

Definitions:

Labor Resources

Human workforce available for the production of goods and services.

Short Run

A time period in which at least one factor of production is fixed, limiting the ability of a business to adjust fully to market changes.

Skilled Labor

Workers who possess specialized skills, training, and education that are required to perform complex tasks.

Unskilled Labor

Refers to workers who lack specialized training or qualifications, often performing manual or routine tasks.