Dobrinski 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) $144,210
B) $210,000
C) $77,709
D) $59,949

Question

Dobrinski 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) $144,210 
B) $210,000 
C) $77,709 
D) $59,949

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($240,000 - $0) ÷ 4 years = $60,000 per year 11eacbfc_c80f_b15e_8ffe_313fa15fe48f_TB7552_00

Dobrinski Corporation Has Provided the Following Information Concerning a Capital