UR Company Is Considering Rebuilding and Selling Used Alternators for Automobiles

question 85

Multiple Choice

UR Company is considering rebuilding and selling used alternators for automobiles. The company estimates that the net operating cash flows (sales minus cash operating expenses) arising from the rebuilding and sale of the used alternators would be as follows (numbers in parentheses indicate an outflow) :
$\begin{array}{|l|r|}\hline \text { Year } 1-10 & \$ 90,000 \\\hline \text { Year } 11 & (\$ 20,000) \\\hline \text { Year } 12 & \$ 100,000 \\\hline\end{array}$
In addition to the above net operating cash flows, UR Company would purchase production equipment costing $\$ 200,000$ now to use in the rebuilding of the alternators. The equipment would have a 12 -year life and a $\$ 15,000$ salvage value. The company's discount rate is $10 \%$ . (Ignore income taxes in this problem.)
- What is the net present value of ALL cash flows associated with this investment,rounded to the nearest dollar? (Do not round your intermediate calculations.)

• A) $362,950.
• B) $377,864.
• C) $382,644.
• D) $391,884.

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Definitions:

Visionary Goal

A long-term, aspirational goal set by a company or organization, aiming to guide its progress and inspire stakeholders towards overarching ambitions.

Core Values

Fundamental beliefs or principles that guide an organization's actions, decisions, and interactions with stakeholders.

Core Purpose

The fundamental reason a company exists beyond just making a profit, often reflecting its values and long-term goals.

Core Values

Fundamental beliefs or principles that guide an organization's actions and decisions, shaping its culture and identity.