acct 4302 capital budgeting quiz

acct 4302 capital budgeting quiz - Quiz Chapter 20 1....

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Quiz – Chapter 20 1. Hawkeye Cleaners has been considering the purchase of an industrial dry-cleaning machine. The existing machine is operable for three more years and will have a zero disposal price. If the machine is disposed of now, it may be sold for $60,000. The new machine will cost $200,000 and an additional cash investment in working capital of $60,000 will be required. The new machine will reduce the average amount of time required to wash clothing and will decrease labor costs. The investment is expected to net $50,000 in additional cash inflows during the year of acquisition and $150,000 each additional year of use. The new machine has a three-year life. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life.
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This note was uploaded on 05/02/2008 for the course ACCT 4302 taught by Professor Ho during the Spring '08 term at UT Arlington.

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acct 4302 capital budgeting quiz - Quiz Chapter 20 1....

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