The Becker Company Is Interested in Buying a Piece of Equipment

question 26

Multiple Choice

The Becker Company is interested in buying a piece of equipment. The following data have been assembled concerning this equipment:
$\begin{array}{|l|r|}\hline \text { Cost of Required Equipment } & \$ 250,000 \\\hline \text { Working capital required } & \$ 100,000 \\\hline \text { Annual operating cash inflows } & \$ 80,000 \\\hline \text { Cash repair at End of Four years } & \$ 40,000 \\\hline \text { Salvage Value at End of Six Years } & \$ 90,000 \\\hline\end{array}$
This equipment is expected to have a useful life of six years. At the end of the sixth year, the working capital would be released for use elsewhere. The company's discount rate is $10 \%$ . (Ignore income taxes in this problem.)
- The present value of all future annual operating cash inflows is closest to which of the following? (Do not round your intermediate calculations.)

• A) $278,700.
• B) $348,421.
• C) $452,301.
• D) $480,000.

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Definitions:

Gastrocnemius

A major calf muscle that is involved in running, jumping, and other movements requiring power from the lower leg.

Vastus Lateralis

A muscle part of the quadriceps group, situated on the lateral side of the thigh.

Gluteus Maximus

The largest and most superficial of the three gluteal muscles, responsible for the shape of the buttocks and movement of the hip and thigh.

Biceps Femoris

A muscle of the thigh that is part of the hamstrings, involved in knee flexion and thigh extension.