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

question 49

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.
-What is the net present value of the Neptune Ltd.investment?

• A)($26,291)
• B)($47,277)
• C)$225,536
• D)($60,613)
• E)$93,000

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Definitions:

System

A set of interrelated components that function together towards achieving a particular goal or set of objectives.

Process Reengineering

The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.

Control

The process of directing, regulating, or managing activities to achieve certain objectives.

Meeting Customer Needs

The process of identifying, understanding, and adequately fulfilling the requirements and expectations of customers.