Rossiter Restaurants Is Analyzing a Project That Requires $180,000 of Fixed

question 83

Multiple Choice

Rossiter Restaurants is analyzing a project that requires $180,000 of fixed assets.When the project ends,those assets are expected to have an aftertax salvage value of $45,000.How is the $45,000 salvage value handled when computing the net present value of the project?

• A)reduction in the cash outflow at time zero
• B)cash inflow in the final year of the project
• C)cash inflow for the year following the final year of the project
• D)cash inflow prorated over the life of the project
• E)not included in the net present value

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Definitions:

Cyclically Balanced

A fiscal policy strategy where government budgets are planned to balance over the business cycle, running surpluses in boom years and deficits during recessions.

Federal Deficits

The financial shortfall that occurs when a government's expenditures exceed its revenues in a given fiscal year.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by devastating economic contraction, high unemployment, and deflation.

Welfare Outlays

Expenditures made by governments aimed at supporting the wellbeing of citizens, including benefits for the unemployed, poor, disabled and elderly.