(Ignore Income Taxes in This Problem

question 52

Multiple Choice

(Ignore income taxes in this problem.) Trybus Corporation uses a discount rate of 16% in its capital budgeting. Partial analysis of an investment in automated equipment with a useful life of 5 years has thus far yielded a net present value of -$233,764. This analysis did not include any estimates of the intangible benefits of automating this process nor did it include any estimate of the salvage value of the equipment.
-Ignoring any salvage value,to the nearest whole dollar how large would the additional cash flow per year from the intangible benefits have to be to make the investment in the automated equipment financially attractive?

• A)$71,400
• B)$37,402
• C)$233,764
• D)$46,753

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Definitions:

Neutrons

Subatomic particles present in the nucleus of an atom, having no electric charge.

Hydrogen Bond

A feeble connection formed between two molecules through the electrostatic force that attracts a proton in one molecule to an electronegative atom in the other.

Covalently Bonded

Refers to atoms connected by the sharing of pairs of electrons, creating a stable arrangement of atomic components.

Attraction

The force or influence that draws objects or individuals together.