Use the Following Information to Answer the Following Question(s)

question 48

Multiple Choice

Use the following information to answer the following question(s) .
Delta Inc.is considering the purchase of a new machine which is expected to increase sales by $10,000 in addition to increasing non-depreciation expenses by $3,000 annually.Due to the sales increase,Delta will need to increase working capital by $1,000 at the beginning of the project.Delta will depreciate the machine using the straight-line method over the project's five year life to a salvage value of zero.The machine's purchase price is $20,000.The firm has a marginal tax rate of 34 percent,and its required rate of return is 12 percent.
-The machine's initial cash outflow is

• A)$20,000.
• B)$21,000.
• C)$27,000.
• D)$23,000.

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Definitions:

Mining Industry

Refers to the sector involved in the extraction of minerals and other geological materials from the earth.

Consumer Culture

A societal framework where buying and consuming goods and services is a primary pursuit and indicator of social status or personal happiness.

Increasing Debt

This refers to a situation where an entity, be it an individual, company, or government, experiences a continuous rise in the amount of money owed to others.

Uneven Prosperity

Refers to a situation in which economic growth or wealth accumulation benefits certain groups, sectors, or regions more than others, leading to disparities in income and living standards.