The Company Uses Straight-Line Depreciation on All Equipment

question 65

Multiple Choice

$\begin{array}{l}\text { Oriental Company has gathered the following data on a proposed investment project: }\\\begin{array} { | l | r | } \hline \text { Investement in Depreciable Equipment } & \$ 200,000 \\\hline\end{array}\end{array}$
$\begin{array}{|l|r|}\hline \text { Annual Net Cash Flows } & \$ 50,000 \\\hline \text { Life of the Equipment } & 10 \text { years } \\\hline \text { Salvage Value } & -0- \\\hline \text { Discount Rate } & 10 \%\\\hline\end{array}$
The company uses straight-line depreciation on all equipment. (Ignore income taxes in this problem.)
- What would be the net present value of this investment? (Do not round your intermediate calculations and round your final answer to the nearest whole number.)

• A) ($14,350).
• B) $77,200.
• C) $107,228.
• D) $200,000.

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Definitions:

Flood Basalts

Large volcanic eruptions that cover large areas with basalt lava, often contributing to significant geological formations.

Life on Earth

Refers to the existence and diversity of living organisms on the planet Earth, including plants, animals, and microorganisms.

Mass Extinction

The disappearance of many species and families of creatures in a geologically short period of time.

Flood Basalts

Vast plateau-forming volcanic eruptions that release large volumes of basaltic lava.