A corporation is evaluating the relevant cash flows for a capital budgeting decision and must estimate the terminal cash flow. The proposed machine will be disposed of at the end of its usable life of five years at an estimated sale price of $15,000
The machine has an original purchase price of $80,000, installation cost of $20,000, and will be depreciated under the five-year MACRS. Net working capital is expected to decline by $5,000. The firm has a 40 percent tax rate on ordinary income and long-term capital gain. The terminal cash flow is ________.
A) $24,000
B) $16,000
C) $14,000
D) $26,000
B
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Companies that employ a market development growth strategy ________
A) sell new products and services to existing groups of buyers B) sell their existing products and services into new markets C) innovate new products and services targeted at new groups of customers D) market existing products and services to existing customers in new ways
Covered interest arbitrage can be taken advantage of when premiums in forward rates are not
exactly equal to the interest rate differential between two countries. Indicate whether the statement is true or false