Lambert Manufacturing Has $\$ 60,000$ To Invest in Either Project a or Project B

question 92

Multiple Choice

Lambert Manufacturing has $\$ 60,000$ to invest in either Project A or Project B. The following data are available on these projects:
$\begin{array}{|l|r|r|}\hline & \text { Project A } & \text { Project B } \\\hline \text { Cost of equipment needed now } & \$ 120,000 & \$ 70,000 \\\hline \text { Working capital investment needed now } & & \$ 50,000 \\\hline \text { Annual net operating cash inflows } & \$ 50,000 & \$ 45,000 \\\hline \text { Salvage value of equipment in six years } & \$ 15,000 & \\\hline\end{array}$
Both projects have a useful life of six years. At the end of six years, the working capital investment will be released for use elsewhere. Lambert's discount rate is $14 \%$ . (Ignore income taxes in this problem.)
- The net present value of Project A is closest to which of the following? (Do not round your intermediate calculations.)

• A) $67,610.
• B) $74,450.
• C) $81,267.
• D) $141,267.

---

Definitions:

Persuasive Request

is a communication designed to convince the recipient to take a specific action that the sender desires, using logical and emotional appeals.

Logical Case

A method of reasoning or argument that is well-structured and grounded in clear, sound principles.

Anger And Emotion

Feelings of displeasure or antagonism, often accompanied by physiological and psychological responses.

Valid Request

A legitimate or reasonable demand or enquiry made by an individual or group.