Rollans 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.
Use Exhibit 7B-1, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the entire project is closest to:
A) $308,778
B) $224,000
C) $108,778
D) $118,230

Question

Rollans 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.
Use Exhibit 7B-1, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the entire project is closest to:
A) $308,778 
B) $224,000 
C) $108,778 
D) $118,230

Quizplus · Accepted Answer

Depreciation expense = (Original cost − Salvage value) ÷ Useful life
= ($200,000 − $0) ÷ 4 years = $50,000 per year 11eacbfc_c81f_1a2a_8ffe_876d83278a18_TB7552_00

Rollans Corporation Has Provided the Following Information Concerning a Capital