(Ignore Income Taxes in This Problem

question 94

Multiple Choice

(Ignore income taxes in this problem.) Gillaspie, Inc., is considering the purchase of a machine that would cost $300,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $51,000. The machine would reduce labor and other costs by $86,000 per year. Additional working capital of $10,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 13% on all investment projects.
-What would the annual net cash inflows from this project have to be in order to justify investing in remodeling?

• A)$14,495
• B)$35,842
• C)$16,147
• D)$29,158

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Definitions:

Pentagon

The United States Department of Defense's headquarters, a five-sided building located in Arlington, Virginia.

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Acts of violence conducted by individuals or groups meant to instill fear and achieve political, religious, or ideological goals.