Assume the following information for a capital budgeting proposal with a five-year time horizon: ...
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Accounting
Assume the following information for a capital budgeting proposal with a five-year time horizon:
Initial investment: Cost of equipment (zero salvage value) $ 460,000
Annual revenues and costs: Sales revenues $ 300,000
Variable expenses $ 130,000
Depreciation expense $ 50,000
Fixed out-of-pocket costs $ 40,000
If the companys discount rate is 12%, then the net present value for this investment is closest to:
Multiple Choice
A. $171,600.
B. $(71,600).
C. $(171,600).
D. $8,650.
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