Waltermire Corporation has provided the following information concerning a capital budgeting project: The working capital would be required immediately and would be released for use elsewhere at the end of the 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 entire project is closest to:
A) $224,000
B) $193,640
C) $101,648
D) $120,728

Question

Waltermire Corporation has provided the following information concerning a capital budgeting project:  The working capital would be required immediately and would be released for use elsewhere at the end of the 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 entire project is closest to:
A) $224,000 
B) $193,640 
C) $101,648 
D) $120,728

Quizplus · Accepted Answer

Depreciation expense = (Original cost - Salvage value) ÷ Useful life
= ($160,000 - $0) ÷ 4 years = $40,000 per year 11eacbfc_c814_9291_8ffe_7742a25ad5ff_TB7552_00

Waltermire Corporation Has Provided the Following Information Concerning a Capital