FRL 301 Chapter 10 Conceptual

Dependable Motors just purchased some MACRS 5-year property at a cost of $216,000. The MACRS rates are .2, .32, and .192 for years 1 to 3, respectively. Which one of the following will correctly give you the book value of this equipment at the end of year 2? $216,000 / (1 + .2 + .32) $216,000 ×(1 - .2 - .32) $216,000 ×(.20 + .32) [$216,000 ×(1 - .20)] ×(1 - .32) $216,000 / [(1 + .20)(1 + .32)]

$216,000 ×(1 - .2 - .32)

Changes in the net working capital requirements: Can affect the cash flows of a project every year of the project's life. Only affect the initial cash flows of a project. Only affect the initial and final cash flows of a project. Are generally excluded from project analysis due to their irrelevance to the total project. Are excluded from the analysis as long as they are recovered when the project ends.

Can affect the cash flows of a project every year of the project's life

All of the following are related to a proposed project. Which one of these should be included in the cash flow at Time 0? Loan obtained to finance the project Initial investment in inventory to support the project Annual depreciation tax shield Aftertax salvage value Net working capital recovery

Initial investment in inventory to support the project