Mom's Cookies Inc

question 113

Multiple Choice

Mom's Cookies Inc.is considering the purchase of a new cookie oven.The original cost of the old oven was $30,000;it is now 5 years old,and it has a current market value of $13,333.33.The old oven is being depreciated over a 10-year life towards a zero estimated salvage value on a straight line basis,resulting in a current book value of $15,000 and an annual depreciation expense of $3,000.The old oven can be used for 6 more years but has no market value after its depreciable life is over.Management is contemplating the purchase of a new oven whose cost is $25,000 and whose estimated salvage value is zero.Expected before-tax cash savings from the new oven are $4,000 a year over its full MACRS depreciable life.Depreciation is computed using MACRS over a 5-year life,and the required rate of return is 10 percent.Assume a 40 percent tax rate.What is the net present value of the new oven?

• A) −$2,418
• B) −$1,731
• C) $1,568
• D) $163
• E) $1,731

---

Definitions:

Inclusive Masculinity

A concept that challenges traditional norms of masculinity, advocating for a broader and more flexible understanding of male identity.

Gender Accountability

The process through which we are judged and evaluated (i.e., held accountable) on our appropriate performance of gender identities. Such accountability occurs in an everyday, ongoing fashion.

Normative Masculinity

A set of societal norms dictating the behaviors, actions, and emotions considered appropriate for men and boys to express.