TexMex Products Is Considering a New Salsa Whose Data Are

question 28

Multiple Choice

TexMex Products is considering a new salsa whose data are shown below. The equipment has a constant capital cost allowance over its 3-year life with a zero salvage value. No new working capital would be required. Revenues and cash operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other TexMex products and would reduce the company's pre-tax annual cash flows. What is the project's NPV? (Hint: Cash flows are constant in Years 1 to 3. Actual CCA varies. The proposed CCA is for computational convenience.) WACC10.0%
Pre-tax cash flow reduction in other products (cannibalization) $5,000
Investment cost$65,000
Annual capital cost of allowance$21,665
Annual sales revenues$75,000
Annual cash operating costs$25,000
Tax rate35.0%

• A) $25,269
• B) $26,599
• C) $27,929
• D) $29,325

Understand the concept of social loafing and factors that contribute to it.

Recognize the effects of deindividuation on behavior and how anonymity and group presence can influence individuals.

Analyze the process and consequences of group polarization in shaping attitudes and behavior.

Identify and explain the phenomenon of groupthink and its potential negative outcomes.

---

Definitions:

Intermediate Standard Test

A level of scrutiny or evaluation that falls between minimal and strict examination in legal or regulatory contexts.

Due Process Clause

A constitutional clause that ensures citizens' rights to fair treatment within the standard legal system.

Fourteenth Amendment

An amendment to the United States Constitution that grants citizenship to all persons born or naturalized in the United States and prohibits states from denying any person the equal protection of the laws.

Fifth Amendment

A provision of the U.S. Constitution that provides for several rights of individuals against government actions, including self-incrimination and double jeopardy.