A.

Winston Hardware is analyzing a proposed project that requires an initial investment of $38,000 for fixed assets and $8,000 for net working capital. The project is expected to produce operating cash flows of $9,500 a year for 4 years. The net working capital can be recouped at the end of the project. The fixed assets have an estimated aftertax salvage value of $15,000. Should this project be accepted if the required rate of return is 12 percent? Why or why not?

yes; because the NPV is $3,101.15

yes; because the NPV is $2,528.27

no; because the NPV is $2,528.27

no; because the NPV is $3,101.15

B.

A fixed asset is classified as 5-year MACRS property and has an initial cost of $41,000 What is the aftertax cash flow from the sale of this asset if the pre-tax salvage value at the end of year 3 is $17,500 and the tax rate is 34 percent?

Year	Five-Year Property Class
1	20.00	%
2	32.00
3	19.20
4	11.52
5	11.52
6	5.76

$15,439.38

$15,558.04

$15,564.72

$15,463.06

C.

A firm has sales for the year of $95,500, costs of $48,500, and taxes of $19,000. What is the operating cash flow for the year?

$21,000

Answer cannot be determined from the information provided.

$28,000

$32,000