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Mester Corporation has provided the following Information concerning a capital budgeting project: After-tax discount rate 13% Tax rate 30% Expected life of the project Investment required in equipment $ 84,000 Salvage value of equipment Annual sales Annual cash operating expenses One-time renovation expense in year 3 $ 185,000 $ 130, 000 $ 25,000 Click here to vlew Exhibit 7B-1 to determine the appropriate discount factor(s) using tables. 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. The net present value of the project is closest to: (Round Intermedlate calculations and final answer to the nearest dollar amount.) Multiple Choice $77,700 $36,332 $121,108 $37,108

Mester Corporation has provided the following Information concerning a capital budgeting project: After-tax discount rate 13% Tax rate 30% Expected life of the project Investment required in equipment $ 84,000 Salvage value of equipment Annual sales Annual cash operating expenses One-time renovation expense in year 3 $ 185,000 $ 130, 000 $ 25,000 Click here to vlew Exhibit 7B-1 to determine the appropriate discount factor(s) using tables. 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. The net present value of the project is closest to: (Round Intermedlate calculations and final answer to the nearest dollar amount.) Multiple Choice $77,700 $36,332 $121,108 $37,108

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Mester Corporation has provided the following Information concerning a capital budgeting project: After-tax discount rate 13% Tax rate 30% Expected life of the project Investment required in equipment Salvage value of equipment 4 $ 84,000 $ 185,000 $ 130,000 $ 25,000 Annual sales Annual cash operating expenses One-time renovation expense in year 3 Click here to view Exhibit 7B-1 to determine the appropriate discount factor(s) using tables. The company uses stralght-line depreciation on all equlpment. Assume cash flows occur at the end of the year except for the Initlal Investments. The company takes Income taxes Into account In Its capital budgeting. The net present value of the project Is closest to: (Round Intermedlate calculations and final answer to the nearest dollar amount.) Multiple Choice $77,700 $36,332 $121,108 $37,108
Transcribed Image Text:Mester Corporation has provided the following Information concerning a capital budgeting project: After-tax discount rate 13% Tax rate 30% Expected life of the project Investment required in equipment Salvage value of equipment 4 $ 84,000 $ 185,000 $ 130,000 $ 25,000 Annual sales Annual cash operating expenses One-time renovation expense in year 3 Click here to view Exhibit 7B-1 to determine the appropriate discount factor(s) using tables. The company uses stralght-line depreciation on all equlpment. Assume cash flows occur at the end of the year except for the Initlal Investments. The company takes Income taxes Into account In Its capital budgeting. The net present value of the project Is closest to: (Round Intermedlate calculations and final answer to the nearest dollar amount.) Multiple Choice $77,700 $36,332 $121,108 $37,108
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