Marbry 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) $118,520
B) $224,000
C) $278,520
D) $150,944

Question

Marbry 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) $118,520 
B) $224,000 
C) $278,520 
D) $150,944

Quizplus · Accepted Answer

Depreciation expense = (Original cost − Salvage value) ÷ Useful life
= ($160,000 − $0) ÷ 4 years = $40,000 per year 11eacbfc_c81c_0ccf_8ffe_e541fb66180c_TB7552_00

Marbry Corporation Has Provided the Following Information Concerning a Capital