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

question 165

Multiple Choice

Use the information below to answer the following question(s) .Hawkeye Cleaners has been considering the purchase of an industrial dry-cleaning machine.The existing machine is operable for three more years and will have a zero disposal price.If the machine is disposed of now, it may be sold for $30,000.The new machine will cost $200,000, an additional cash investment in working capital of $60,000 will be required and will be returned at the end of the project.The machine is expected to last 3 years and has an estimated disposal value at that time of $20,000.The new machine will reduce the average amount of time required to wash clothing and will decrease labour costs.The investment is expected to net $50,000 in additional cash inflows during the year of acquisition and $150,000 each additional year of use.These cash flows will generally occur throughout the year and are recognized at the end of each year.Income taxes are not considered in this problem.
-When the net present value method is used, only projects with ________ are ________.

• A)negative net present value; acceptable
• B)negative net future value; not acceptable
• C)positive net future value; acceptable
• D)positive net present value; acceptable
• E)positive net value; not acceptable

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Definitions:

Title Search

A check of public records to confirm a property's legal ownership and identify any claims or liens against it.

Encumbrances

A legal term for a claim, lien, charge, or liability attached to and binding real property.

Title Search

The examination of public records to determine and confirm a property's legal ownership and find out what claims or liens are on the property.

Fair Housing Act

A federal law in the United States aimed at eliminating discrimination in the housing industry based on race, color, religion, sex, national origin, disability, or family status.