(Appendix 13C) Annala Corporation is considering a capital budgeting project that would require investing $80,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $250,000 and annual incremental cash operating expenses would be $180,000. The project would also require an immediate investment in working capital of $20,000 which would be released for use elsewhere at the end of the project. The company's income tax rate is 30% and its after-tax discount rate is 13%. 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:
A) $140,000
B) $120,440
C) $75,830
D) $63,570
Correct Answer:
Verified
Q102: (Appendix 13C) Planas Corporation has provided the
Q103: (Appendix 13C) Donayre Corporation is considering a
Q104: (Appendix 13C) Rollans Corporation has provided the
Q105: (Appendix 13C) Annala Corporation is considering a
Q106: (Appendix 13C) Annala Corporation is considering a
Q108: (Appendix 13C) Planas Corporation has provided the
Q109: (Appendix 13C) Layer Corporation has provided the
Q110: (Appendix 13C) Layer Corporation has provided the
Q111: (Appendix 13C) Rollans Corporation has provided the
Q112: (Appendix 13C) Bedolla Corporation is considering a
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents