A project will produce an operating cash flow of $11,760 a year for three years. The initial cash outlay for equipment will be $12,900. The net aftertax salvage value of $5,200 will be received at the end of the project. The project requires $1,100 of net working capital that will be fully recovered. What is the net present value of the project if the required rate of return is 11 percent?

	A.	12,937
	B.	$19,345
	C.	$26,718
	D.	$16,062

A project will increase annual sales by $237,000 and cash expenses by $95,000 for four years. The project has an initial cost of $126,000 for equipment that will be depreciated using MACRS depreciation. The applicable MACRS table values are 0.1429, 0.2449, 0.1749, and 0.1249 for Years 1 to 4, respectively. The company has a marginal tax rate of 21 percent. What is the depreciation tax shield for Year 3?

	A.	$4,955.77
	B.	$4,627.85
	C.	$8,288.16
	D.	$6,065.53

Soft Feet sells customized shoes. Currently, it sells 26,000 pairs of shoes annually an an average price of $93 a pair. The company is considering adding a lower-priced line of shoes that will sell for $32 a pair. Soft Feet estimates it can sell 12,000 pairs of the lower-priced shoes but will sell 1,300 less pairs of the higher-priced shoes by doing so. What is the amount of the sales that should be used when evaluating the addition of the lower-priced shoes?

	A.	$263,100
	B.	$510,100
	C.	$205,000
	D.	$384,000

The cash flows for a project include the:

	A.	sunk costs, opportunity costs, and erosion costs of the project.
	B.	incremental operating cash flow, as well as the capital spending and net working capital requirements.
	C.	net income generated by the project plus the annual depreciation expense.
	D.	net operating cash flow generated by the project, less both sunk cost and erosion costs.