(Ignore Income Taxes in This Problem

question 163

Multiple Choice

(Ignore income taxes in this problem.) The management of Kobler Corporation is investigating an investment in equipment that would have a useful life of 5 years. The company uses a discount rate of 10% in its capital budgeting. Good estimates are available for the initial investment and the annual cash operating outflows, but not for the annual cash inflows and the salvage value of the equipment. The net present value of the initial investment and the annual cash outflows is -$235,421.
-Ignoring any salvage value, to the nearest whole dollar how large would the annual cash inflow have to be to make the investment in the equipment financially attractive?

• A)$62,100
• B)$23,542
• C)$235,421
• D)$47,084

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Definitions:

Incentive Theories

Psychological models which suggest behavior is motivated by a desire for rewards and avoidance of punishments.

External Stimuli

Elements in the environment that influence behavior or responses, such as light, noise, or temperature.

Physical Attractiveness

Physical attractiveness refers to the degree to which a person's physical traits are considered aesthetically pleasing or beautiful, often influenced by cultural and social norms.

Happiness

A state of well-being and contentment, characterized by positive emotions ranging from contentment to intense joy.