Question
21. The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded
21. The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $160,000, they can be sold for a total of $220,000. As an alternative, the calculators can be sold in their present condition for $50,000.
What is the financial advantage (disadvantage) to the company from upgrading the calculators?
$720,000)
($60,000)
$10,000
$170,000
22. The following data pertain to an investment proposal (Ignore income taxes.):
Cost of the investment | $ | 40,000 | |
Annual cost savings | $ | 11,000 | |
Estimated salvage value | $ | 5,000 | |
Life of the project | 5 | years | |
Discount rate | 10 | % | |
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.
The net present value of the proposed investment is closest to:
$4,806
$3,105
$1,701
$24,000
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