Real Time Inc. the President of Real Time Inc. Has Asked You to Asked

question 96

Multiple Choice

Real Time Inc.
The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $40,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net working capital of $2,000. The computer would increase the firm's before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 3 years and then be sold for $25,000. The firm's marginal tax rate is 40 percent, and the project's required rate of return is 14 percent.
-Refer to Real Time Inc.What is the project's NPV?

• A) $2,622
• B) $2,803
• C) $2,917
• D) $5,712
• E) $6,438

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Definitions:

Psychological

Pertaining to the mind or mental processes affecting behaviour, emotions, and thought processes.

Psychotherapy

Any type of approach that uses psychological rather than biological means to treat psychological disorders.

Insight Therapies

Approaches to psychotherapy based on the notion that psychological well-being depends on self-understanding.

Action Therapies

Therapeutic approaches that emphasize direct action and behavioral change rather than introspection or cognitive analysis.