A Project Will Produce Operating Cash Flows of $42,000 a Year

question 75

Multiple Choice

A project will produce operating cash flows of $42,000 a year for four years.During the life of the project,inventory will be lowered by $12,000,accounts receivable will increase by $15,000,and accounts payable will increase by $10,000.The project requires $120,000 of new equipment that will be depreciated straight-line to a zero book value over four years.At the end of the project,net working capital will return to its normal level and the equipment will be sold for $25,000,after taxes.What is the net present value given a required return of 14 percent?

• A)$13,483.48
• B)$18,117.05
• C)$20,033.36
• D)$12,037.86
• E)$14,322.49

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Definitions:

Latch Instruction

One-half of an instruction pair (the second instruction of the pair being the unlatch instruction) that emulates the latching action of a latching relay. The latch instruction for a programmable logic controller energizes a specified output point or internal coil until it is de-energized by a corresponding unlatch instruction.

MCR Zone

In programmable logic controllers (PLCs), a Master Control Relay zone, which refers to a section of the program controlled by a master relay for safety or operational purposes.

Subroutine

A set of instructions designed to perform a frequently used operation within a program.