Vanzant 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 the tables provided.
The net present value of the entire project is closest to:
A) $149,290
B) $251,440
C) $165,130
D) $231,000

Question

Vanzant 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 the tables provided.
The net present value of the entire project is closest to:
A) $149,290 
B) $251,440 
C) $165,130 
D) $231,000

Quizplus · Accepted Answer

Depreciation expense = (Original cost − Salvage value) ÷ Useful life
= ($240,000 − $0) ÷ 4 years = $60,000 per year 11eacbfc_c817_78d4_8ffe_6532f0ca9aa9_TB7552_00

Vanzant Corporation Has Provided the Following Information Concerning a Capital