(Ignore Income Taxes in This Problem $\begin{array}{lrr} \text {Years 1-10 } &£ 85,000\\ \text {Years 11 } &£(20,000)\\ \text { Years 12} &£ 95,000\\\end{array}$

question 16

Multiple Choice

(Ignore income taxes in this problem.) Murdock Company has a chance to make and sell a new plastic five-gallon container. The company estimates that the net cash flows (sales less cash operating expenses) arising from manufacture and sale of the new container would be as follows (numbers in parentheses indicate an outflow) : $\begin{array}{lrr} \text {Years 1-10 } &£ 85,000\\ \text {Years 11 } &£(20,000) \\ \text { Years 12} &£ 95,000\\\end{array}$

-
Murdock would need to purchase production equipment costing £200,000 now to use in the manufacture of the new containers. This equipment would have a 12-year life and a £20,000 salvage value. Murdock Company's required rate of return is 12%. The net present value of all cash flows associated with this investment (rounded to the nearest thousand pounds) is

• A)£304,000.
• B)£380,000.
• C)£318,000.
• D)£298,000.

---

Definitions:

Normal Model

Another term for the normal distribution, a bell-shaped curve that represents the distribution of many types of data in statistics.

Mathematics Test

An examination designed to assess one's knowledge or proficiency in mathematics.

Normal Model

A statistical distribution that is symmetric and bell-shaped, describing how continuous data is distributed around the mean.

Scores Above

Refers to performance measures or results that exceed a specific threshold or benchmark.