Question
When evaluating a new project, firms should include in the projected cash flows all of the following EXCEPT: Group of answer choices Changes in net
When evaluating a new project, firms should include in the projected cash flows all of the following EXCEPT:
Group of answer choices
Changes in net operating working capital attributable to the project.
The salvage value of assets used for the project that will be recovered at the end of the projects life.
A decline in the sales of an existing product, provided that decline is directly attributable to this project.
The value of a building owned by the firm that will be used for this project.
Previous expenditures associated with a market test to determine the feasibility of the project, provided those costs have been expensed for tax purposes.
Flag question: Question 14
Question 141 pts
Which of the following statements is CORRECT?
Group of answer choices
The regular payback is useful as an indicator of a projects liquidity because it gives managers an idea of how long it will take to recover the funds invested in a project.
The regular payback does not consider cash flows beyond the payback year, but the discounted payback overcomes this defect.
The regular payback method was, years ago, widely used, but virtually no companies even calculate the payback today.
The discounted payback method recognizes all cash flows over a projects life, and it also adjusts these cash flows to account for the time value of money.
The regular payback method recognizes all cash flows over a projects life.
Flag question: Question 15
Question 151 pts
Which of the following is NOT a relevant cash flow and thus should NOT be reflected in the analysis of a capital budgeting project?
Group of answer choices
Sunk costs that have been expensed for tax purposes.
Changes in net operating working capital.
Opportunity costs.
Shipping and installation costs for machinery acquired.
Cannibalization effects.
Flag question: Question 16
Question 161 pts
Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $21,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?
Year | Depreciation Rate |
1 | 0.20 |
2 | 0.32 |
3 | 0.19 |
4 | 0.12 |
5 | 0.11 |
6 | 0.06 |
Group of answer choices
$13,529
$18,908
$12,551
$18,419
$16,300
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