Hinger Corporation is considering a capital budgeting project that would require investing $120,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $350,000 and annual incremental cash operating expenses would be $250,000. The project would also require an immediate investment in working capital of $10,000 which would be released for use elsewhere at the end of the project. The project would also require a one-time renovation cost of $40,000 in year 3. The company's income tax rate is 30% and its after-tax discount rate is 11%. 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:See separate Exhibit 13B-1 to determine the appropriate discount factor(s) using table.
A. $240,000
B. $115,137
C. $108,547
D. $101,259
Answer: D
You might also like to view...
This stage of the innovation process involves a lot of frustration and uncertainty as the adopter has to figure out how this innovation works.
A. persuasion B. decision C. implementation D. confirmation
In a(n) ________ franchise, the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor
A) chain-style B) area C) distributorship D) processing plant
Explain the business judgment rule and its relationship to the fiduciary duty of care owed by corporate officers and directors.
What will be an ideal response?
Compared to access control based on individual accounts, RBAC is ________
A) less prone to error B) more expensive C) Both A and B D) Neither A nor B