(Appendix 8C)Kostka Corporation Is Considering a Capital Budgeting Project That

question 58

Multiple Choice

(Appendix 8C) Kostka Corporation is considering a capital budgeting project that would require investing $160, 000 in equipment with an expected life of 4 years and zero salvage value.Annual incremental sales would be $480, 000 and annual incremental cash operating expenses would be $330, 000.The project would also require an immediate investment in working capital of $20, 000 which would be released for use elsewhere at the end of the project.The project would also require a one-time renovation cost of $0 in year 3.The company's income tax rate is 30% and its after-tax discount rate is 9%.The company uses straight-line depreciation.Assume cash flows occur at the end of the year except for the initial investments.The company takes income taxes into account in its capital budgeting. The net present value of the entire project is closest to:

• A)$213, 123
• B)$198, 963
• C)$308, 000
• D)$320, 010

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Definitions:

Acting Physically

involves using one's body to perform actions or gestures, which can be part of expressive behavior, sports, or theatrical performances.

Sensorimotor Stages

The first of Piaget's stages of cognitive development, where infants learn through interacting with their environment using their senses and motor actions.

Cultural Replication

The transmission and perpetuation of cultural beliefs, practices, and artifacts from one generation to another.

Industrialized Countries

Nations that are characterized by a significant level of industrial activity, advanced technological infrastructure, and higher living standards compared to developing countries.