Demirjian Inc

question 15

Multiple Choice

Demirjian Inc. is considering an investment project that would require an initial investment of $290,000 and that would last for 8 years. The annual cash receipts from the project would be $189,000 and the annual cash expenses would be $85,000. The equipment used in the project could be sold at the end of the project for a salvage value of $29,000. The company's tax rate is 30%. For tax purposes, the entire initial investment will be depreciated over 7 years without any reduction for salvage value. The company uses a discount rate of 13%.
-The net present value of the project is closest to:

• A) $121,972
• B) $114,339
• C) $59,367
• D) $67,000

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Definitions:

Sarcoplasmic Reticulum

A specialized type of smooth endoplasmic reticulum found in muscle cells, involved in calcium storage and release for muscle contraction.

Active Transport

The movement of molecules across a cell membrane from a region of lower concentration to one of higher concentration, requiring energy.

Muscle Hypertrophy

The increase in muscle size and mass due to exercise, particularly strength training.

Fibrosis

A pathological process characterized by the accumulation of excess fibrous connective tissue in an organ or tissue.