Mcelveen 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 table.
The net present value of the project is closest to:
A) $60,960
B) $21,934
C) $84,000
D) $34,194

Question

Mcelveen 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 table.
The net present value of the project is closest to:
A) $60,960 
B) $21,934 
C) $84,000 
D) $34,194

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($80,000 - $0) ÷ 4 years = $20,000 per year 11eacbfc_c80f_1519_8ffe_6532939fa444_TB7552_00

Mcelveen Corporation Has Provided the Following Information Concerning a Capital