Your New Employer, Freeman Software, Is Considering a New Project

question 68

Multiple Choice

Your new employer, Freeman Software, is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, and the allowed depreciation rates for such property are 33.33%, 44.45%, 14.81%, and 7.41% for Years 1 through 4. Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 1 cash flow?

• A) $30,333
• B) $31,849
• C) $33,442
• D) $35,114
• E) $36,869

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Definitions:

Accounts Over 30 Days

Accounts receivable that have not been paid within 30 days of the invoice date, indicating delayed payments.

Receivables Manager

A professional responsible for overseeing and managing a company's accounts receivable to ensure timely collection of owed money.

Receivables-To-Sales Ratio

A financial metric measuring the proportion of a company's receivables relative to its total sales, indicating how efficiently it collects on sales credit.

Payables-To-Sales Ratio

A financial metric that analyzes the relationship between a company's total payables and its total sales.