Mester Corporation has provided the following information concerning a capital budgeting project:
The company uses straight-line depreciation on all equipment.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 project is closest to:
A) $88,740
B) $110,500
C) $165,669
D) $45,669

Question

Mester Corporation has provided the following information concerning a capital budgeting project:
 The company uses straight-line depreciation on all equipment.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 project is closest to:
A) $88,740 
B) $110,500 
C) $165,669 
D) $45,669

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($120,000 - $0) ÷ 4 years = $30,000 per year
 11ea7761_15ce_0eae_81a5_ef5cc2b6ea73_TB2580_00

Mester Corporation Has Provided the Following Information Concerning a Capital